UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| x | Quarterly REPORT PURSUANT to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 20202023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-39669or
For the transaction period from _____________ to _____________
Commission File No. 001-39669
COEPTIS THERAPEUTICS HOLDINGS, INC.
| 98-1465952 | ||
(State or other jurisdiction of
| (I.R.S. Employer
|
105 Bradford Rd, Suite 420 Wexford, Pennsylvania15090 (724) 934-6467 coeptistx.com
|
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of | ||
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share
Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the precedingpast 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐x No ☒¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒x No ☐¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-212(b)-2 of the Exchange Act):. Yes ☒ ¨No ☐x
AsIndicate the number of December 9, 2020, there were 9,656,250 ordinary shares nooutstanding of each of the issuer's classes of common stock, as of the latest practicable date:
The number of shares outstanding of the registrant’s common stock, par value issued and outstanding.$0.0001 per share, as of November 8, 2023, was .
BULL HORN HOLDINGS CORP.
COEPTIS THERAPEUTICS, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER
For the Quarter Ended September 30, 20202023
TABLE OF CONTENTS
| PART I -- FINANCIAL INFORMATION | 3 |
| Unaudited Financial Statements | 3 |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
| Item 3. | Quantitative and Qualitative Disclosures |
| Item 4. | Controls and Procedures |
| 33 |
| Item 1. | Legal Proceedings |
| Item 1A. | Risk Factors |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 3. | Defaults Upon Senior Securities |
| Item 4. | Mine Safety Disclosures | ||
| Item 5. | Other Information | 33 |
| Item 6. | Exhibits | 33 |
| SIGNATURES | 34 |
i
| 2 |
PART I — FINANCIAL INFORMATION
| Item 1. | Unaudited Financial Statements |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current asset - cash | $ | 307 | $ | 505 | ||||
| Deferred offering costs | 214,927 | 171,040 | ||||||
| TOTAL ASSETS | $ | 215,234 | $ | 171,545 | ||||
| LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||
| Current liabilities | ||||||||
| Accrued expense | $ | — | $ | 450 | ||||
| Accrued offering costs | 22,710 | 2,758 | ||||||
| Promissory note – related party | 177,329 | 152,644 | ||||||
| Total Current Liabilities | 200,039 | 155,852 | ||||||
| Commitments | ||||||||
| Shareholder’s Equity | ||||||||
| Preferred shares, no par value; unlimited shares authorized; none issued and outstanding | — | — | ||||||
| Ordinary shares, no par value; unlimited shares authorized; 2,156,250 shares issued and outstanding at September 30, 2020 and December 31, 2019(1) | 25,000 | 25,000 | ||||||
| Accumulated deficit | (9,805 | ) | (9,307 | ) | ||||
| Total Shareholder’s Equity | 15,195 | 15,693 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | $ | 215,234 | $ | 171,545 | ||||
| ASSETS | ||||||||
| As of | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 1,411,510 | $ | 3,791,302 | ||||
| Accounts receivable | – | 8,075 | ||||||
| Notes receivable | 2,500,000 | – | ||||||
| Interest receivable | 833 | – | ||||||
| Prepaid assets, current portion | 208,133 | 142,356 | ||||||
| TOTAL CURRENT ASSETS | 4,120,476 | 3,941,733 | ||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Furniture and fixtures | 25,237 | 25,237 | ||||||
| Less: accumulated depreciation | 13,622 | 12,695 | ||||||
| Furniture and fixtures, net | 11,615 | 12,542 | ||||||
| OTHER ASSETS | ||||||||
| Prepaid insurance | 205,833 | 348,333 | ||||||
| License right, net of accumulated amortization | 2,804,167 | 3,554,167 | ||||||
| Right of use asset, net of accumulated amortization | 28,676 | 58,914 | ||||||
| Total other assets | 3,038,676 | 3,961,414 | ||||||
| TOTAL ASSETS | $ | 7,170,767 | $ | 7,915,689 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 482,005 | $ | 99,021 | ||||
| Accrued expenses | 298,266 | 181,998 | ||||||
| Notes payable, current portion | 825,000 | 1,500,000 | ||||||
| Right of use liability, current portion | 10,757 | 41,618 | ||||||
| TOTAL CURRENT LIABILITIES | 1,616,028 | 1,822,637 | ||||||
| LONG TERM LIABILITIES | ||||||||
| Notes payable | 150,000 | 150,000 | ||||||
| Derivative liability warrants | 378,375 | 1,125,000 | ||||||
| Right of use liability, non-current portion | 14,723 | 14,723 | ||||||
| TOTAL LONG TERM LIABILITIES | 543,098 | 1,289,723 | ||||||
| TOTAL LIABILITIES | 2,159,126 | $ | 3,112,360 | |||||
| COMMITMENTS AND CONTINGENCIES (NOTE 6) | – | – | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Series B preferred stock, $ par value, shares authorized, shares issued and outstanding, respectively | – | – | ||||||
| Common stock, $ par value, shares authorized, shares issued and outstanding at September 30, 2023, and shares issued and outstanding at December 31, 2022 | 3,299 | 1,957 | ||||||
| Additional paid-in capital | 87,990,247 | 70,541,095 | ||||||
| Accumulated deficit | (82,981,905 | ) | (65,739,723 | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | 5,011,641 | 4,803,329 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 7,170,767 | $ | 7,915,689 | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
1
| 3 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Formation and operating costs | $ | 50 | $ | — | $ | 500 | $ | 1,026 | ||||||||
| Loss from operations | (50 | ) | — | (500 | ) | (1,026 | ) | |||||||||
| Other income: | ||||||||||||||||
| Interest income - bank | — | 2 | 2 | 2 | ||||||||||||
| Net (Loss) Income | $ | (50 | ) | 2 | $ | (498 | ) | $ | (1,024 | ) | ||||||
| Weighted average shares outstanding, basic and diluted (1) | 1,875,000 | 1,875,000 | 1,875,000 | 1,682,692 | ||||||||||||
| Basic and diluted net loss per ordinary shares | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| 3 Months Ended | 9 Months Ended | |||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
| SALES | ||||||||||||||||
| Consulting services | $ | – | $ | – | $ | – | $ | – | ||||||||
| Sales | – | – | – | – | ||||||||||||
| Total sales | – | – | – | – | ||||||||||||
| Cost of goods | – | – | – | – | ||||||||||||
| Gross profit | – | – | – | – | ||||||||||||
| COST OF OPERATIONS | ||||||||||||||||
| Research and development | 4,983,349 | 20,887 | 5,386,129 | 20,887 | ||||||||||||
| General and administrative expenses | 2,815,870 | 5,488,540 | 12,457,548 | 30,948,831 | ||||||||||||
| Selling and marketing | 12,412 | 2,859 | 12,711 | 6,911 | ||||||||||||
| Interest expense | 19,800 | 56,423 | 93,853 | 176,068 | ||||||||||||
| Total operating expenses | 7,831,431 | 5,568,709 | 17,950,241 | 31,152,697 | ||||||||||||
| LOSS FROM OPERATIONS | (7,831,431 | ) | (5,568,709 | ) | (17,950,241 | ) | (31,152,697 | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Royalties and licensing fees | (15,000 | ) | (80,000 | ) | (15,000 | ) | (85,000 | ) | ||||||||
| Other expense | (23,601 | ) | – | (23,566 | ) | – | ||||||||||
| Loss on extinguishment of debt | – | – | – | (3,393,542 | ) | |||||||||||
| Gain on change in fair value of derivative liability warrants | 1,609,125 | – | 746,625 | – | ||||||||||||
| TOTAL OTHER INCOME (EXPENSE), NET | 1,570,524 | (80,000 | ) | 708,059 | (3,478,542 | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | (6,260,907 | ) | (5,648,709 | ) | (17,242,182 | ) | (34,631,239 | ) | ||||||||
| PROVISION (BENEFIT) FOR INCOME TAXES | – | – | – | – | ||||||||||||
| NET LOSS | $ | (6,260,907 | ) | $ | (5,648,709 | ) | $ | (17,242,182 | ) | $ | (34,631,239 | ) | ||||
| LOSS PER SHARE | ||||||||||||||||
| Loss per share, basic and fully diluted* | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding* | ||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| * | September 30, 2022 retroactively adjusted to reflect the impact of the 1 for 2.96851721 reverse stock split from October 28, 2022 |
| 4 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’SSTOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
| SERIES B | ADDITIONAL | COMMON | ||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | PAID-IN | STOCK | TREASURY | ACCUMULATED | |||||||||||||||||||||||||||||||
| SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | SUBSCRIBED | STOCK | DEFICIT | TOTAL | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2021* | 8,000 | $ | 1 | 12,492,050 | $ | 1,196 | $ | 30,146,728 | $ | – | $ | (247,165 | ) | $ | (27,550,126 | ) | $ | 2,350,634 | ||||||||||||||||||
| Shares issued for cash* | – | – | 142,158 | 14 | 1,265,986 | – | – | – | 1,266,000 | |||||||||||||||||||||||||||
| Shares issued for services* | – | – | 397,505 | 40 | 3,539,960 | – | – | – | 3,540,000 | |||||||||||||||||||||||||||
| Retirement of shares | – | – | (110,762 | ) | – | (247,165 | ) | – | 247,165 | – | – | |||||||||||||||||||||||||
| Warrants converted to shares* | – | – | 24,704 | 2 | 107,498 | 2,500 | – | – | 110,000 | |||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | 10,841,695 | – | – | – | 10,841,695 | |||||||||||||||||||||||||||
| Warrants issued for extinguishment of debt | – | – | – | – | 3,408,559 | – | – | – | 3,408,559 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (19,179,693 | ) | (19,179,693 | ) | |||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2022* | 8,000 | $ | 1 | 12,945,655 | $ | 1,252 | $ | 49,063,261 | $ | 2,500 | $ | – | $ | (46,729,819 | ) | $ | 2,337,195 | |||||||||||||||||||
| Shares issued for cash | – | – | 76,974 | 8 | 685,477 | – | – | – | 685,485 | |||||||||||||||||||||||||||
| Shares issued for services | – | – | 20,212 | 2 | 179,998 | – | – | – | 180,000 | |||||||||||||||||||||||||||
| Warrants converted to shares | – | – | 99,376 | 10 | 382,490 | – | – | 382,500 | ||||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | 8,278,691 | – | – | – | 8,278,691 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (9,802,837 | ) | (9,802,837 | ) | |||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2022* | 8,000 | $ | 1 | 13,142,217 | $ | 1,272 | $ | 58,589,917 | $ | 2,500 | $ | – | $ | (56,532,656 | ) | $ | 2,061,034 | |||||||||||||||||||
| Shares issued for cash | – | – | 185,278 | 19 | 1,319,981 | – | – | – | 1,320,000 | |||||||||||||||||||||||||||
| Shares issued for services | – | – | 101,061 | 10 | 899,990 | – | – | – | 900,000 | |||||||||||||||||||||||||||
| Warrants converted to shares | – | – | 1,126,578 | 113 | 4,758,212 | (2,500 | ) | – | – | 4,755,824 | ||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | 3,355,206 | – | – | – | 3,355,206 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (5,648,709 | ) | (5,648,709 | ) | |||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2022* | 8,000 | $ | 1 | 14,555,133 | $ | 1,414 | $ | 68,923,306 | $ | – | $ | – | $ | (62,181,365 | ) | $ | 6,743,355 | |||||||||||||||||||
| Ordinary Shares (1) | Accumulated | Total Shareholder’s | ||||||||||||||
| Shares | Amount | Deficit | Equity | |||||||||||||
| Balance – January 1, 2020 | 2,156,250 | $ | 25,000 | $ | (9,307 | ) | $ | 15,693 | ||||||||
| Net income | — | — | 2 | 2 | ||||||||||||
| Balance – March 31, 2020 | 2,156,250 | 25,000 | (9,305 | ) | 15,695 | |||||||||||
| Net loss | — | — | (450 | ) | (450 | ) | ||||||||||
| Balance – June 30, 2020 | 2,156,250 | 25,000 | (9,755 | ) | 15,245 | |||||||||||
| Net loss | — | — | (50 | ) | (50 | ) | ||||||||||
| Balance – September 30, 2020 | 2,156,250 | $ | 25,000 | $ | (9,805 | ) | $ | 15,195 | ||||||||
Continued
THREE AND NINE MONTHS ENDED SEPTEMBER
| 5 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended September 30, 20192023 and 2022
(Unaudited)
(Continued)
| Ordinary Shares | Accumulated | Total Shareholder’s | ||||||||||||||
| Shares | Amount | Deficit | Equity | |||||||||||||
| Balance – January 1, 2019 | 1 | $ | 25,000 | $ | (7,073 | ) | $ | 17,927 | ||||||||
| Issuance of ordinary shares to Sponsor (1) | 2,156,249 | — | — | — | ||||||||||||
| Net loss | — | — | (350 | ) | (350 | ) | ||||||||||
| Balance – March 31, 2019 | 2,156,250 | 25,000 | (7,423 | ) | 17,577 | |||||||||||
| Net loss | — | — | (676 | ) | (676 | ) | ||||||||||
| Balance – June 30, 2019 | 2,156,250 | 25,000 | (8,099 | ) | 16,901 | |||||||||||
| Net income | — | — | 2 | 2 | ||||||||||||
| Balance – September 30, 2019 | 2,156,250 | $ | 25,000 | $ | (8,097 | ) | $ | 16,903 | ||||||||
| SERIES B | ADDITIONAL | COMMON | ||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | PAID-IN | STOCK | TREASURY | ACCUMULATED | |||||||||||||||||||||||||||||||
| SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | SUBSCRIBED | STOCK | DEFICIT | TOTAL | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2022 | – | $ | – | 19,566,839 | $ | 1,957 | $ | 70,541,095 | $ | – | $ | – | $ | (65,739,723 | ) | $ | 4,803,329 | |||||||||||||||||||
| Shares issued for services | – | – | 1,374,197 | 137 | 2,396,677 | 720,000 | – | – | 3,116,814 | |||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | 1,111,706 | – | – | – | 1,111,706 | |||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | 122,391 | – | – | – | 122,391 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (7,868,244 | ) | (7,868,244 | ) | |||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2023 | – | $ | – | 20,941,036 | $ | 2,094 | $ | 74,171,869 | $ | 720,000 | $ | – | $ | (73,607,967 | ) | $ | 1,285,996 | |||||||||||||||||||
| Shares issued for services | – | – | 700,000 | 70 | 1,070,930 | (720,000 | ) | – | – | 351,000 | ||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | 811,500 | – | – | – | 811,500 | |||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | 113,301 | – | – | – | 113,301 | |||||||||||||||||||||||||||
| Issuance of common stock and warrants, net of issuance costs | – | – | 2,755,000 | 276 | 3,040,585 | – | – | – | 3,040,861 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (3,113,031 | ) | (3,113,031 | ) | |||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2023 | – | $ | – | 24,396,036 | $ | 2,440 | $ | 79,208,185 | $ | – | $ | – | $ | (76,720,998 | ) | $ | 2,489,627 | |||||||||||||||||||
| Shares issued for cash | – | – | 500,000 | 50 | 499,950 | – | – | – | 500,000 | |||||||||||||||||||||||||||
| Shares issued in exchange for note receivable | – | – | 2,500,000 | 250 | 2,499,750 | – | – | – | 2,500,000 | |||||||||||||||||||||||||||
| Shares issued for services | – | – | 550,000 | 54 | 531,746 | – | – | – | 531,800 | |||||||||||||||||||||||||||
| Warrants issued for services | – | – | – | – | 514,819 | – | – | – | 514,819 | |||||||||||||||||||||||||||
| Stock based compensation | – | – | – | – | 113,301 | – | – | – | 113,301 | |||||||||||||||||||||||||||
| Issuance of common stock and warrants, net of issuance costs | – | – | 745,000 | 75 | – | – | – | – | 75 | |||||||||||||||||||||||||||
| Shares issued for the conversion of debt | – | – | 300,000 | 30 | 302,896 | – | – | – | 302,926 | |||||||||||||||||||||||||||
| Shares issued in connection with asset purchase agreement | – | – | 4,000,000 | 400 | 4,319,600 | – | – | – | 4,320,000 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (6,260,907 | ) | (6,260,907 | ) | |||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2023 | – | $ | – | 32,991,036 | $ | 3,299 | $ | 87,990,247 | $ | – | $ | – | $ | (82,981,905 | ) | $ | 5,011,641 | |||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 6 |
COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (498 | ) | $ | (1,024 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accrued expenses | (450 | ) | — | |||||
| Net cash used in operating activities | (948 | ) | (1,024 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from promissory note - related party | 22,527 | 89,809 | ||||||
| Payment of offering costs | (21,777 | ) | (88,282 | ) | ||||
| Net cash provided by financing activities | 750 | 1,527 | ||||||
| Net Change in Cash | (198 | ) | 503 | |||||
| Cash – Beginning | 505 | — | ||||||
| Cash – Ending | $ | 307 | $ | 503 | ||||
| Non-cash investing and financing activities: | ||||||||
| Deferred offering costs included in accrued offering costs | $ | 5,000 | $ | 600 | ||||
| 9 Months Ended | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (17,242,182 | ) | $ | (34,631,239 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | 750,927 | 751,038 | ||||||
| Gain on change in value of warrant liability | (746,625 | ) | – | |||||
| Stock based compensation | 348,993 | – | ||||||
| Shares issued for non-employee services | 3,999,614 | 4,620,000 | ||||||
| Warrants issued for extinguishment of debt | – | 3,408,559 | ||||||
| Warrants issued for services | 2,438,026 | 22,475,592 | ||||||
| Shares issued in connection with asset purchase agreement | 4,320,000 | – | ||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | 8,075 | (8,075 | ) | |||||
| Interest receivable | (833 | ) | – | |||||
| Prepaid assets | 76,724 | – | ||||||
| Right of use asset/liability | (623 | ) | 836 | |||||
| Increase (decrease) in: | ||||||||
| Accounts payable | 382,983 | 193,780 | ||||||
| Accrued expenses | 119,193 | 161,050 | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | (5,545,728 | ) | (3,028,459 | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | – | – | ||||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of common stock and warrants, net of issuance costs | 3,040,935 | – | ||||||
| Repayment of notes payable | (374,999 | ) | (300,000 | ) | ||||
| Shares issued for cash | 500,000 | 3,271,485 | ||||||
| Shares issued for cash for the conversion warrants | – | 5,248,324 | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 3,165,936 | 8,219,809 | ||||||
| NET INCREASE (DECREASE) IN CASH | (2,379,792 | ) | 5,191,351 | |||||
| CASH AT BEGINNING OF PERIOD | 3,791,302 | 2,179,558 | ||||||
| CASH AT END OF PERIOD | $ | 1,411,510 | $ | 7,370,909 | ||||
| SUPPLEMENTAL CASH FLOW DISCLOSURES | ||||||||
| Interest paid | $ | – | $ | – | ||||
| Taxes paid (refunded) | $ | – | $ | – | ||||
| SUPPLEMENTAL NON-CASH DISCLOSURES | ||||||||
| Shares issued in exchange for notes receivable | $ | 2,500,000 | $ | – | ||||
| Shares issued for the conversion of debt | $ | 302,926 | $ | – | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
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COEPTIS THERAPEUTICS HOLDINGS, INC. formerly known as BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBERNine months ended September 30, 2020
(Unaudited)
2023 and 2022 (unaudited)
NOTE 1. 1 – DESCRIPTION OF ORGANIZATIONBUSINESS AND BUSINESS OPERATIONSBASIS OF PRESENTATION
Bull HornNature of Business
General. Coeptis Therapeutics Holdings, Corp. (theInc. (“Coeptis”, the “Company” or “we” or “our”) is a blank check companywas originally incorporated in the British Virgin Islands on November 27, 2018. The Company was formed for2018, under the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all ofname Bull Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities (“Business Combination”). Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses in the sports (including sports franchises or assets related to sports franchises and sports technology), entertainment and brands sectors.
As of September 30, 2020, the Company had not yet commenced any operations. All activity from November 27, 2018 (inception) through September 30, 2020 relatesBritish Virgin Islands to the Company’s formation and its initial public offering (the “Initial Public Offering”).
The registration statement for the Company’s Initial Public Offering was declared effective onState of Delaware. On October 29, 2020. On November 3, 2020, the Company consummated the Initial Public Offering of 7,500,000 units (the “Units” and, with respect to the ordinary shares included28, 2022, in the Units sold, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $75,000,000 which is described in Note 3.
Simultaneouslyconnection with the closing of the Initial Public Offering, the Company consummated the sale of 3,750,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to the Company’s sponsor,Merger, we changed our corporate name from Bull Horn Holdings Sponsor LLC (the “Sponsor”), Imperial Capital, LLC (“Imperial”), I-Bankers Securities,Corp. to “Coeptis Therapeutics Holdings, Inc. (“I-Bankers”) and Northland Securities, Inc. (“Northland”) (and their designees), generating gross proceeds of $3,750,000, which is described in Note 4. Each of these Private Warrants allow the holder thereof to purchase one ordinary share.”
The Merger Transaction costs amounted to $4,243,264 consisting. On October 28, 2022, a wholly owned subsidiary of $1,500,000 of underwriting fees, $2,250,000 of deferred underwriting feesBull Horn Holdings Corp., merged with and $493,264 of other offering costs. In addition, cash of $997,780 was held outsideinto Coeptis Therapeutics, Inc., with Coeptis Therapeutics, Inc. as the surviving corporation of the Trust Account (as defined below) and is available for working capital purposes.Merger. As a result of the Merger, we acquired the business of Coeptis Therapeutics, Inc., which we now continue to operate as our wholly owned subsidiary.
FollowingAbout the closing of the Initial Public Offering on November 3, 2020, an amount of $75,750,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Warrants was placed inCompany’s Subsidiaries. We are now a trust account (the “Trust Account”) located in the United States and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less, or in any open-ended investmentholding company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.currently operates through our direct and indirect wholly owned subsidiaries Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and Coeptis Pharmaceuticals, LLC.
The Company’s management has broad discretionOur current business model is designed around furthering the development of our current product portfolio. We are continually exploring partnership opportunities with respectcompanies that have novel therapies in various stages of development or companies with technologies that improve the way that drugs are delivered to patients. We seek the specific application of the net proceeds of the Initial Public Offeringbest strategic relationships, which relationships could include in-license agreements, out-license agreements, co-development arrangements and sale of the Private Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balanceother strategic partnerships in the Trust Account (less any deferred underwriting commissionsnew and taxes payable on interest earned) at the time of the signing of an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to registerexciting therapeutic areas such as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.auto-immune disease and oncology.
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 immediately prior to or upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.
If the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.
BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.10 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The Sponsor and any of the Company’s officers or directors that may hold founder shares (the “initial shareholders”), Imperial and I-Bankers have agreed (a) to vote their founder shares, and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s Memorandum and Articles of Association with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the founder shares) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the Memorandum and Articles of Association relating to shareholders’ rights of pre-Business Combination activity and (d) that the founder shares shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the initial shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete its Business Combination.
The Company will have until May 3, 2022 to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than five business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $50,000), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriters have agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the amount initially funded in the Trust Account ($10.10 per share).
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $10.10 per share (whether or not the underwriters’ over-allotment option is exercised in full), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statement. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
6
BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation –
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The interim results of operations are not necessarily indicative of the results that may occur for interim financialthe full fiscal year. Certain information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosuresdisclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to theinstructions, rules, and regulations ofprescribed by the SEC for interim financial reporting. Accordingly, they do not include all the informationUnited States Securities and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
Exchange Commission (“SEC”). The accompanying unauditedinterim condensed consolidated financial statements should be read in conjunction with the Company’s prospectusaudited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for its Initial Public Offering asthe year ended December 31, 2022 that was filed with the SEC on OctoberMarch 29, 2020, as well as2023.
As a result of the Merger, the accompanying condensed consolidated financial statements included in this report reflect (1) the historical operating results of Coeptis prior to the Merger; (2) the combined results of the Company and Coeptis following the closing of the Merger; (3) the assets and liabilities of Coeptis at their historical cost; and (4) the Company’s Current Reportsequity structure for all periods presented.
Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements include the accounts of Coeptis Therapeutics Holdings Inc. (formerly Bullhorn Holdings, Inc.), Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and its wholly-owned subsidiary, Coeptis Pharmaceuticals, LLC. All material intercompany accounts, balances and transactions have been eliminated.
Risks and Uncertainties – In late 2019, an outbreak of a novel strain of the Coronavirus 2019 Disease (“COVID-19”) was identified and infections have been found in a number of countries around the world, including the United States. COVID-19 and its impact on trade including customer demand, travel, employee productivity, supply chain, and other economic activities has had, and may continue to have, a potentially significant effect on financial markets and business activity. The COVID-19 pandemic continues to evolve and the duration of its impact on the Company’s operational and financial performance is currently uncertain and cannot be predicted with confidence.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2 “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 8-K, as10-K filed with the SEC on November 3, 2020March 29, 2023. There have been no material changes to the significant accounting policies during the three-month and November 9, 2020. The interim results for the three and nine monthsnine-month periods ended September 30, 2020 are not necessarily indicative of the results to be expected2023, except for the year ending December 31, 2020 or for any future periods.items mentioned below.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates –
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual Actual results could differ significantly from those estimates.
CashEmployee and Cash EquivalentsNon-Employee Share-Based Compensation –
The Company considersapplies Accounting Standards Codification (“ASC”) 718-10, “Share-Based Payment,” which requires the measurement and recognition of compensation expenses for all short-term investmentsshare-based payment awards made to employees and directors including employee stock options equity awards issued to employees and non-employees based on estimated fair values.
ASC 718-10 requires companies to estimate the fair value of equity-based option awards on the date of grant using an option-pricing model. The fair value of the award is recognized as an expense on a straight-line basis over the requisite service periods in the Company’s condensed consolidated statements of operations. The Company recognizes share-based award forfeitures as they occur.
The Company estimates the fair value of granted option equity awards using a Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from the grant date until the options are exercised or expire). Expected volatility is estimated based on volatility of the Company. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an original maturityequivalent term. The expected option term is calculated for options granted to employees and directors using the “simplified” method. Changes in the determination of each of the inputs can affect the fair value of the options granted and the results of operations of the Company.
Adoption of New Accounting Pronouncements
During the three months and nine months ended September 30, 2023 and 2022, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”). Each of these pronouncements, as applicable, has been or less when purchasedwill be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s condensed consolidated financial statements.
Going Concern – The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in the United States of America, which contemplate continuation of the Company as a going concern, which is dependent upon the Company’s ability to be cash equivalents. The Company did not have any cash equivalentsobtain sufficient financials or establish itself as a profitable business. As of September 30, 20202023, the Company had an accumulated deficit of $82,981,905. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with respect to operations include raising additional capital through sales of equity or debt securities as may be necessary to pursue its business plans and December 31, 2019.sustain operations until such time as the Company can achieve profitability. Management believes that additional financing as necessary will result in improved operations and cash flow. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations.
Deferred Offering CostsNOTE 3 – LICENSE RIGHT
Offering costs consistPrior to 2022, the Company entered into an agreement with a foreign entity to market, distribute, and sell the Consensi product (“Product”) on an exclusive basis within the United States and Puerto Rico. Upon execution of legal, accounting and other costs incurred through the balance sheet date that are directly relatedAgreement the Company paid $1,000,000 to the Initial Public Offering. Offering costs amounting to $4,243,264foreign entity. Milestone payments were charged to shareholders’ equitydue as follows; (1) $1,500,000 upon the completion of the Initial Public Offering (seeCMC Plan as reimbursements of costs incurred by the foreign entity, (2) $1,000,000 was due upon first commercial sale of the Product which occurred in June 2020. Milestones were met and paid in 2020.
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In September of 2021, the Company executed a license termination agreement with the foreign entity to cease all efforts for sales and promotion of the product in the United States and Puerto Rico. The termination included (i) issuance of $1,500,000 of convertible debt due in 2023 to satisfy amounts owed for the license, (ii) the issue of warrants (See Note 1)5) and (iii) transfer of inventory ownership back to the foreign entity. In conjunction with this termination, the Company also terminated its marketing agreement with a third party for the Product’s sales and promotion. On July 14, 2023, the Company executed an amendment to revise the note’s payment schedule. The revised payment schedule has four milestone payments (the first two of which were paid on July 17, 2023 and September 30, 2023, with the remaining two due on December 31, 2023 and March 31, 2024). As of September 30, 2020 and2023, there was an outstanding balance of $625,000 due under the convertible note.
During the year ended December 31, 2019, there were $214,9272021, the Company and $171,040, respectively,VyGen-Bio, Inc. (“Vy-Gen”) entered into agreements to jointly develop and commercialize two Vy-Gen product candidates, CD38-GEAR-NK and CD38-Diagnostic (the “CD38 Assets”). The Company paid $1,750,000 and issued promissory notes totaling $3,250,000 to Vy-Gen in accordance with the agreements. The collaboration arrangement provides the right for the Company to participate, under the direction of deferred offering costs recordeda joint steering committee, in the accompanying condenseddevelopment and commercialization of the CD38 Assets and a 50/50 profit share, with the profit share subject to contingent automatic downward adjustment up to 25% upon an event of default in connection with the promissory notes. The Company capitalized $5,000,000 to be amortized over a five-year period in which the CD38 Assets are expected to contribute to future cash flows. In March of 2022, a $250,000 payment was made toward the promissory notes. In November of 2022, a $1,500,000 payment was made toward the promissory notes, and the accrued interest was forgiven. As of September 30, 2023, there is no balance sheets.
BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBERdue under the two promissory notes. The Company is in compliance with the option agreement as of September 30, 2020
(Unaudited)
Income Taxes2023.
The Company compliesmade certain judgements as the basis in determining the accounting treatment of these options. The CD38 Assets represent a platform technology and a diagnostic tool which have multiple applications and uses. Both projects are intended to be used in more than one therapy or diagnostic option. For example, GEAR-NK is a technology which allows for the gene editing of human natural killer cells, so that these cells can no longer bind and be destroyed by targeted monoclonal antibody treatments. The GEAR-NK technology can be modified to work concomitantly with many different monoclonal antibody treatments in which there are currently over 100 approved by the FDA. Anti-CD38 is only the first class of monoclonal antibody treatments being developed under the GEAR-NK platform. Therefore, the pursuit of FDA approval for the use of CD38 assets for at least one indication or medical device approval is at least reasonably expected. Further, as the diagnostic asset may be used as an in vitro technology, it could be classified as a medical device, and therefore toxicity studies would not be a contingency to be resolved before reasonably establishing future value assumptions. In addition, there is perceived value in the CD38 assets, based on publicly disclosed current business deals in cell therapies, the developing market for these innovative technologies, and current interest from third parties in these technologies. The Company may sell or license its right to another party, with the accountingwritten consent of VyGen Bio, which cannot be unreasonably withheld. Furthermore, the Company believes that any negative results from ongoing development of a single therapy or use, would not result in abandoning the project. Given these considerations, The Company has determined that these options have alternative future use and reporting requirementsshould be recorded as assets pursuant to ASC 730-10-25-2, Research and Development.
Related to the joint development, the Company, under the direction of ASC Topic 740, “Income Taxes,”the joint steering committee, is assessing market opportunities, intellectual property protection, and potential regulatory strategies for the CD38 Assets. VyGen Bio is responsible for development activities conducted and overseen by the scientists at Karolinska Institute. The agreement does not currently require additional payments for R&D costs by the Company and no additional payments are required upon development or regulatory milestones.
NOTE 4 – DEBT
In January 2020, the Company entered into a Senior Secured Note agreement with an unrelated party. The principal amount of $500,000, which requiresis secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. On April 14, 2022, the Company entered into a Debt modification agreement with the note holder, extending the maturity to July 31, 2022. The extension was executed in exchange for consideration of warrants exchangeable for 400,000 shares of common stock at a price of $1.50 per share issued to the debt holders on January 28, 2022. See Note 5 for further details of the Company’s warrants. In December of 2022, a $500,000 payment was made, along with an assetinterest payment of $135,671, which satisfied the note in full.
In January 2020, the Company entered into a Senior Secured Note agreement with an unrelated party. The principal amount of $167,000, which is secured by a security agreement, together with interest at 8%, plus additional 2% in the event of default, was due February 8, 2021. On April 14, 2022, the Company entered into a Debt modification agreement with the note holder, extending the maturity to July 31, 2022. The extension was executed in exchange for consideration of warrants exchangeable for 250,000 shares of common stock at a price of $1.50 per share issued to the debt holders on January 28, 2022. See Note 5 for further details of the Company’s warrants. In July of 2022, a $50,000 payment was made toward principal. In November of 2022, a $117,000 payment was made, along with an interest payment of $42,893, which satisfied the note in full.
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In September 2021, as part of a termination of a license agreement with Purple BioTech (“Purple”), the Company issued a convertible note in the principal amount of $1,500,000 that is payable on or before February 2023, bearing interest of 5% per annum and liability approachconvertible in whole or in part at any time by Purple into shares of Common Stock of the Company. The conversion price is $5 per share of common stock, subject to financial accountingcertain adjustments under such terms and reporting for income taxes. Deferred income tax assets and liabilities are computed for differencesconditions as agreed between the financial statementparties. The Company may prepay the principal amount of the Note plus accrued and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicableunpaid interest at any time, prior to the periodsMaturity Date. Inventory, which has been fully written-off on the Company’s balance sheet, will be transferred back to Purple at Purple’s cost. On July 14, 2023, the Company and Purple executed an amendment to revise the note’s payment schedule, extending the outside maturity date to March 31, 2024. As of September 30, 2023, there was an outstanding balance of $625,000 due under the convertible note.
In May 2023, the Company entered into an unsecured Note agreement with an unrelated party in the principal amount of $200,000, which is secured by a security agreement, together with interest at 4.5% which was due on June 15, 2023. The Note has not been paid and is currently in default. The Company and the differencesunrelated party have verbally agreed to convert the principal into equity at a later date.
In June 2023, the Company entered into an unsecured Note agreement with an unrelated party in the principal amount of $150,000. In August 2023, this Note was converted into shares of the Company’s common stock.
In September 2023, the Company entered into an unsecured convertible Note agreement in the principal amount of $150,000. Shortly thereafter, prior to September 30, 2023, this Note was converted into shares of the Company’s common stock.
Loans under the CARES Act -- On July 8, 2020, the Company received a loan of $150,000 from the United States Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. Proceeds are expectedintended to affect taxable income. Valuation allowancesbe used for working capital purposes. Interest on the EIDL loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are established, when necessary,due monthly in the amount of $731. Each payment will be applied first to reduce deferred tax assetsinterest accrued to the amount expected to be realized.
ASC Topic 740 prescribes a recognition thresholddate of receipt of each payment, and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the British Virgin Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits,balance, if any, as income tax expense. There were no unrecognized tax benefitswill be applied to principal. Installment payments have been deferred by the SBA until January 2023. The balance of principal and interest is payable thirty years from the date of the promissory note. The balance of the loan is $150,000, as of September 30, 20202023 and 2022.
Maturities of notes payable are as follows for the years ended December 31, 2019 and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
| Schedule of maturities for notes payable | ||||
| 2023 | $ | 200,000 | ||
| 2024 | 625,000 | |||
| 2025 | – | |||
| 2026 | – | |||
| 2027 | 1,687 | |||
| Thereafter | 148,313 | |||
| Total notes payable | $ | 975,000 | ||
Derivative Liability Warrants -
The Company may be subject to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The Company is considered to be an exempted British Virgin Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
Net Loss per Ordinary Share
Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 281,250 ordinary shares, that were subject to forfeiture if the over-allotment option was not exercised by the underwriter (see Note 5). At September 30, 2023, there were (i) 7,500,000 public warrants (the “Public Warrants”) outstanding that were issued as part of Bull Horn’s November 2020 and 2019, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then shareinitial public offering, which warrants are exercisable in the earningsaggregate to acquire 3,750,000 shares of the Company. As a result, diluted loss perour common share is the same as basic loss per share for the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 7,500,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one ordinary share and one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one-half of one ordinary sharestock at an exercise price of $11.50 per whole share, subject to adjustment (see Note 7).
BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor, Imperial, I-Bankers and Northland (and their designees) purchased an aggregate of (ii) 3,750,000 Private Warrants (defined below) at a price of $1.00 per Private Warrant, of which 2,625,000 Private Warrants were purchased by the Sponsor and 1,125,000 Private Warrants were purchased by Imperial, I-Bankers and Northland ($3,750,000 in the aggregate). The Sponsor, Imperial, I-Bankers and Northland have agreed to purchase up to an additional 337,500 Private Warrants at a price of $1.00 per Private Warrant, or an aggregate of $337,500, in the case that the underwriters’ over-allotment option is exercised in full or in part. Each of these Private Warrants allow the holder thereof to purchase one ordinary share. The proceeds from the sale of the Private Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. The Private Warrants are identical to the Public Warrants sold in the Initial Public Offering, except for the private warrants (“Private(the “Private Placement Warrants”) allow the holder thereof to one ordinary share and as further described in Note 7. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In November 2018, in anticipation of the expected issuance of 2,156,250 founder shares to the Sponsor, the Sponsor paid certain of the Company’s deferred offering costs with the $25,000 purchase price of the founder shares. As of December 31, 2018, one founder share was issued to the Sponsor. The remaining 2,156,249 founder sharesoutstanding that were issued to our sponsor Bull Horn Holdings Sponsor LC and the Sponsor on January 28, 2019.
The 2,156,250 founder shares include an aggregate of up to 281,250 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercisedunderwriters in full orBull Horn’s initial public offering in part, so that the initial shareholders will collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the initial shareholders do not purchase any Public SharesNovember 2020, which warrants are exercisable in the Initial Public Offering).
aggregate to acquire 3,750,000 shares of our common stock at an exercise price of $11.50 per share, The initial shareholders have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until, with respect to 50% of the founder shares, the earlier of (i) six months after the date ofPrivate Placement Warrants became exercisable on the consummation of aour Business Combination or (ii) the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, and, with respect to the remaining 50% of the founder shares, upon six months after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Promissory Note — Related Party
On November 18, 2018, as amended on December 23, 2019, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The note was non-interest bearing and payable on the earlier of (i) December 31, 2020 or (ii) the consummation of the Initial Public Offering. As of September 30, 2020 and December 31, 2019, there was $177,329 and $152,644, respectively, outstanding under the Promissory Note. The outstanding balance under the Promissory Note of $194,830 was repaid at the closing of the Initial Public Offering on November 3, 2020.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation of a Business Combination into additional Private Warrants at a price of $1.00 per Private Warrant. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Anchor Investors
Six unaffiliated qualified institutional buyers (who are also not affiliated with the Sponsor or any member of the Company’s management team) purchased Units in the Initial Public Offering at a level of 9.9% of the Units subject to the Initial Public Offering (which aggregates to 59.4% of the Units subject to the Initial Public Offering) and entered into subscription agreements with the Sponsor to memorialize their agreement. The Company refers to these investors as “anchor investors.” In consideration of providing these agreements, the anchor investors each purchased membership interests in the Sponsor, for nominal consideration, entitling them to an interest in an aggregate of 270,000 founder shares held by the Sponsor or 45,000 founder shares for each anchor investor (which the Company refers to as the “anchor founder shares”). The anchor founder shares are treated the same in all material respects as the founder shares held by the Sponsor, except (i) such investors will forfeit their anchor founder shares if they do not purchase a number of Units equal to 9.9% of the number Units sold in the Initial Public Offering and (ii) such anchor founder shares shall have the right not to be subject to adjustments or cutbacks in the event the Sponsor agrees to any such adjustments or cutbacks (of its shares) in connection with the initial Business Combination. Discussions with each anchor investor were separate and the arrangements with them are not contingent on each other. Further, to the Company’s knowledge, the anchor investors are not affiliated with each other and are not acting together with regards to the Company.
Pursuant to the subscription agreements with the Sponsor, the anchor investors have not been granted any material additional shareholder or other rights, and are only being issued membership interests in the Sponsor with no right to control the Sponsor or vote or dispose of the anchor founder shares (which will continue to be held by the Sponsor until following the initial Business Combination). Further, the anchor investors are not required to: (i) hold any Units, ordinary shares or warrants they may purchase in the Initial Public Offering or thereafter for any amount time, (ii) vote any ordinary shares they may own at the applicable time in favor of the initial Business Combination or (iii) refrain from exercising their right to redeem their ordinary shares at the time of the initial Business Combination. The purchases by the anchor investors of Units in the Initial Public Offering or the Company’s securities in the open market (or both) could, if they hold such securities, allow the anchor investors or any one of them to assert influence over the Company, including with respect to the initial Business Combination.
Registration Rights
Pursuant to a registration rights agreement entered into on October 29, 2020, the holders of the founder shares, the Private Warrants and underlying securities, and any securities issued upon conversion of Working Capital Loans (and underlying securities) will be entitled to registration rights pursuant to a registration rights agreement. The holders of at least a majority in interest of the then-outstanding number of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. Notwithstanding the foregoing, Imperial, I-Bankers and Northland may not exercise their demand and “piggyback” registration rights after five (5) and seven (7) years after the effective date of the registration statement and may not exercise its demand rights on more than one occasion. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to 1,125,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions.
The underwriters are entitled to a deferred fee of three percent (3.0%) of the gross proceeds of the Initial Public Offering, or $2,250,000 (or up to $2,587,500 if the underwriters’ over-allotment is exercised in full). The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
NOTE 7. SHAREHOLDER’S EQUITY
Preferred Shares — The Company is authorized to issue an unlimited number of no par value preferred shares, divided into five classes, Class A through Class E, each with such designation, rights and preferences as may be determined by a resolution of the Company’s board of directors to amend the Memorandum and Articles of Association to create such designations, rights and preferences. The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each Class is issued. All shares of a single class must be issued with the same rights and obligations. Accordingly, starting with five classes of preferred shares will allow the Company to issue shares at different times on different terms. At September 30, 2020 and December 31, 2019, there are no preferred shares designated, issued or outstanding.
Ordinary Shares — The Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the Company’s ordinary shares are entitled to one vote for each share. At September 30, 2020 and December 31, 2019, there were 2,156,250 ordinary shares issued and outstanding, of which 281,250 are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full, so that the initial shareholders will own 20% of the issued and outstanding shares after the Initial Public Offering (assuming the initial shareholders do not purchase any Units in the Initial Public Offering).
10
BULL HORN HOLDINGS CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Warrants — The Public Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) 12 months from the effective date of the registration statement relating to the Initial Public Offering.2022. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstandingshares of common stock. With respect to the foregoing, if a registration statement covering the ordinary shares of common stock issuable upon the exercise of the Public Warrants, is not effective within 90 days from the consummation of a Business Combination,class A warrants and the holders may, until such time as there is an effective registration statement andclass B warrants during any period when the Company shall have failed to maintain an effective registration statement related to the issuance of such shares underlying the applicable warrants, the holder of any applicable warrants may exercise the Public Warrantsits warrant on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
In addition, if (x) the Company issues additional shares or equity-linked securities for capital raising purposes in connection with the closing of its Business Combination at an issue price or effective issue price of less than $9.50 per share (as adjusted for splits, dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsor, initial shareholders or their affiliates, without taking into account any founder shares held by them prior to such issuance) (the “Newly Issued Price”)), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its Business Combination (such price, the “Market Value”) is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of (i) the Market Value and (ii) the Newly Issued Price, and the $16.50 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal to 165% of the higher of (i) the Market Value and (ii) the Newly Issued Price.
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The Company may call the warrantsPublic Warrants for redemption, (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:
| at any time while the Public Warrants are exercisable, |
| · | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, | |
| if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a | ||
| if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stockshare dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described above, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
The Private Placement Warrants are identical to the Public Warrants, underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants only allow the holder thereof to one ordinary share and the ordinary shares issuable upon the exercise ofshare. Additionally, the Private Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the PrivatePlacement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8. SUBSEQUENT EVENTSWithin ASC 815, “Derivative and Hedging,” Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s ordinary share. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s ordinary share if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement Warrants and Public Warrants are not indexed to the Company’s ordinary share in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that certain warrant provisions preclude equity treatment as by ASC Section 815-10-15.
The Company evaluatedaccounts for its Public Warrants and Private Placement Warrants as liabilities as set forth in ASC 815-40-15-7D and 7F. See below for details over the methodology and valuation of the Warrants.
The Company follows the guidance in ASC Topic 820, Fair Value Measurement for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
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The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Schedule of fair value of warrants | ||||||||||||
| Description | Level | September 30, 2023 | December 31, 2022 | |||||||||
| Warrant Liability – Public Warrants | 1 | $ | 169,500 | $ | 750,000 | |||||||
| Warrant Liability – Private Placement Warrants | 3 | $ | 208,875 | $ | 375,000 | |||||||
The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations.
The Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Warrants is the expected volatility of the ordinary shares. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. For periods subsequent eventsto the detachment of the Public Warrants from the Units, the close price of the Public Warrant price will be used as the fair value as of each relevant date.
The following table provides quantitative information regarding Level 3 fair value measurements:
| Schedule of fair value assumptions | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Risk-free interest rate | 4.56% | 3.97% | ||||||
| Expected volatility | 59.41% | 67.1% | ||||||
| Exercise price | $ | 11.50 | $ | 11.50 | ||||
| Stock price | $ | $ | ||||||
The following table presents the changes in the fair value of warrant liabilities:
| Schedule of changes in fair value of warrant liabilities | ||||||||||||
Private Placement | Public | Warrant Liabilities | ||||||||||
| Fair value as of December 31, 2022 | $ | 375,000 | $ | 750,000 | $ | 1,125,000 | ||||||
| Change in valuation inputs | 1,012,500 | 375,000 | 1,387,500 | |||||||||
| Fair value as of March 31, 2023 | 1,387,500 | 1,125,000 | 2,512,500 | |||||||||
| Change in valuation inputs | 75,000 | (600,000 | ) | (525,000 | ) | |||||||
| Fair value as of June 30, 2023 | 1,462,500 | 525,000 | 1,987,500 | |||||||||
| Change in valuation inputs | (1,253,625 | ) | (355,500 | ) | (1,609,125 | ) | ||||||
| Fair value as of September 30, 2023 | $ | 208,875 | $ | 169,500 | $ | 378,375 | ||||||
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the three and nine months ended September 30, 2023 and 2022.
NOTE 5 – CAPITAL STRUCTURE
The total number of shares of stock which the corporation shall have authority to issue is 160,000,000 shares, of which shares of $ par value shall be designated as common stock and shares of $ shall be designated as preferred stock. The preferred stock authorized by the Company’s Articles of Incorporation may be issued in one or more series. The Board of Directors of the Corporation is authorized to determine or alter the rights, preferences, privileges, and restrictions granted or imposed upon any wholly unissued series of preferred stock, and within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series, to determine the designation and par value of any series and to fix the numbers of shares of any series.
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Common Stock - As of September 30, 2023 the Company had shares of its common stock issued and outstanding, and on December 31, 2022 the Company had shares of its common stock issued and outstanding. All references to the common shares outstanding have been retroactively adjusted to reflect the stock split unless stated otherwise.
In 2022, and again in 2023, Coeptis Therapeutics Holdings, Inc., raised capital by issuance of common stock above the stated par value. The contributed capital recognized as additional paid in capital during the nine months ended September 30, 2023 and 2022 was $499,950 and $3,271,444, respectively. During the nine months ended September 30, 2023 and 2022, there were no in capital distributions.
On June 16, 2023, the Company completed a public offering issuing 2,150,000 shares of our common stock, 1,350,000 pre-funded warrants, 3,062,500 Series A Warrants and 3,062,500 Series B Warrants, for net proceeds of approximately $3.0 million, after offering costs. The Pre-funded warrants are immediately exercisable, at a price of $0.0001 per share, with no expiration date. As of September 30, 2023, all of the of the pre-funded warrants had been exercised for a total of shares of common stock issued as a result of the public offering. The Series A Warrants and the Series B Warrants are referred to herein together as the “Series Warrants.” The shares of common stock and Series Warrants were purchased together and then immediately separable and were issued separately. Each Series Warrant to purchase one share of common stock has an exercise price of $1.65 per share, and is initially exercisable commencing 6 months from the date of the offering. The Series Warrants are exercisable for a term of five years following the initial exercise date. As discussed in Note 11, Subsequent Events, each Series Warrant was repriced from an exercise price of $1.65 per share to an exercise price of $1.36 per share in connection with the October private placement. See Note 11, Subsequent Events.
Treasury Stock – As part of the Merger in February of 2021, Coeptis Therapeutics, Inc., our wholly-owned subsidiary, repurchased shares of its common stock previously held by shareholders of Vinings Holdings Inc. (the former name of Coeptis Therapeutics, Inc.). The stock was recorded at the cost paid for it, of $ and held as Treasury stock for the duration of 2021. Subsequent to year end, the Company retired the shares of Treasury Stock, as of February 18, 2022. There was no treasury stock at September 30, 2023 and 2022.
Preferred Stock – As of September 30, 2023 the Company had shares of preferred stock issued and outstanding. As of September 30, 2022, Coeptis Therapeutics, Inc., our wholly-owned subsidiary, had shares of its Series B preferred stock issued and outstanding. The Series B preferred stock was converted into common equity immediately prior to the consummation of the Business Combination, and the shares of common stock received in such conversion were exchanged for shares of common stock in the Company at the closing of the Business Combination.
Stock Based Compensation –
Stock Based Compensation
A summary of the Company’s stock option activity is as follows:
| Schedule of option activity | ||||||||||||||||
| Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Contractual Life (Years) | Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2022 | – | – | ||||||||||||||
| Granted | 1,457,500 | $ | 2.20 | 8.53 | $ | – | ||||||||||
| Forfeited | – | – | ||||||||||||||
| Exercised | – | – | ||||||||||||||
| Outstanding at September 30, 2023 | 1,457,500 | $ | 2.20 | 7.86 | $ | – | ||||||||||
For the three months ended September 30, 2023 and 2022, the Company recorded $ and $, respectively, for stock-based compensation expense related to stock options. For the nine months ended September 30, 2023 and 2022, the Company recorded $ and $, respectively, for stock-based compensation expense related to stock options. As of September 30, 2023, unamortized stock-based compensation for stock options was $ to be recognized through December 31, 2026.
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The options granted during the nine months ended September 30, 2023 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:
| Schedule of options assumptions | |||
| For the nine months ended September 30, 2023 | |||
| Expected term, in years | 5.38 | ||
| Expected volatility | 79.35% | ||
| Risk-free interest rate | 3.66% | ||
| Dividend yield | – |
Common Stock Warrants –
As a result of the Merger on October 28, 2022, all surviving warrants from Coeptis Therapeutics, Inc. were converted using a 2.9685:1 ratio, and became exercisable to acquire shares of the Company’s common stock.
On November 23, 2020, Coeptis Therapeutics, Inc. (under its prior name Vinings Holdings Inc.) issued a class A and a class B warrant to Coral Investment Partners, LP (“CIP”), with each warrant granting CIP the right to purchase 500,000 shares of common stock at a price of $2 for Class A or $5 for Class B. The warrants expire on November 30, 2023. The warrants also contain a cashless exercise provision and contain anti-dilution provisions. In October 2021, the Company was notified by the warrant holder that they intend to exercise its right to purchase shares of the Company under these warrants. However, the required cash payment has not been received, and as of September 30, 2023, all warrants remain outstanding, exercisable to acquire 336,869 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 1 – On May 28, 2021, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase shares of common stock at a price of $ per share, shares at $ per share, and shares at $ per share. The warrants expire on June 1, 2026. As part of the call, warrants at $1 per share were exercised on July 28, 2022. As of September 30, 2023, the remaining warrants outstanding are exercisable to acquire 504,461 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 2 – On July 30, 2021, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase shares of common stock at a price of $ per share, shares at $ per share, and shares at $ per share. The warrants expire on July 26, 2026. As part of the call, warrants at $1 per share were exercised on March 1, 2022, and warrants at $1 per share and warrants at $2 per share were exercised on June 27, 2022. warrants at $2 per share expired on September 13, 2022 as a result of the call. As of September 30, 2023, the remaining warrants outstanding are exercisable to acquire 33,687 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
On September 22, 2021, Coeptis Therapeutics, Inc. issued a warrant in conjunction with the termination of the license right (see Note 3) with Purple, granting Purple the right to purchase 300,000 shares of common stock at $5 per share, subject to certain adjustments. During 2021, the Company recorded $ as general and administrative expense in condensed consolidated statement of operations upon immediate vesting of the Warrant. The warrant was valued using the Black-Scholes option pricing model using the following assumptions: 1) exercise price of $5.00 per share, 2) fair value of $6.50 per share, 3) discount rate of 0.48%, 3) dividend rate of 0%, and 4) a term of 3 years. As of September 30, 2023, all warrants remain outstanding and are exercisable to acquire 101,061 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 3 – On December 20, 2021, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for services to be provided, granting the warrant holder the right to purchase 600,000 shares of common stock at a price of $1 per share. The warrants expire on December 20, 2026. As part of the call, 300,000 of the warrants were transferred to Warrant Holder 4, and 175,000 of the warrants were transferred to Warrant Holder 5. The remaining warrants at $1 per share were exercised on August 19, 2022, and warrants at $1 per share expired on September 13, 2022 as a result of the call. As of September 30, 2023, there are no warrants outstanding.
| 15 |
Warrant Holder 4 – On July 13, 2022, Warrant Holder 3 transferred 300,000 warrants to Warrant Holder 4 with the same terms. As part of a call, warrants at $1 per share were exercised on August 19, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 5 – On September 6, 2022, Warrant Holder 3 transferred 175,000 warrants to Warrant Holder 5 with the same terms, and Warrant Holder 9 transferred 200,000 to Warrant Holder 5 with the same terms. As of September 30, 2023, all warrants remain outstanding and are exercisable to acquire 126,326 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 6 – On January 28, 2022, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for contemplation of a debt extension, granting the warrant holder the right to purchase 250,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. The warrants were expensed immediately as a loss on extinguishment of debt. Subsequently, on April 14, 2022, an agreement was executed with the debt holder extending the maturity of the debt to July 31, 2022 in recognition of the warrants issued on January 28, 2022. This amendment was treated as a debt modification. As of September 30, 2023, all warrants remain outstanding and are exercisable to acquire 84,217 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022
Warrant Holder 7 – On January 28, 2022, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for contemplation of a debt extension, granting the warrant holder the right to purchase 400,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. The warrants expire on January 31, 2024. The warrants were expensed immediately as a loss on extinguishment of debt. Subsequently, on April 14, 2022, an agreement was executed with the debt holder extending the maturity of the debt to July 31, 2022 in recognition of the warrants issued on January 28, 2022. This amendment was treated as a debt modification. As of September 30, 2023, all warrants remain outstanding and are exercisable to acquire 134,747 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 8 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 775,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 9 – On January 28, 2022, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 200,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, all 200,000 warrants at $1.50 per share were transferred to Warrant Holder 5. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 10 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 350,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on March 1, 2022, warrants at $1.50 per share were exercised on August 19, 2022 and warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 11 – On January 28, 2022, Coeptis Therapeutics, Inc. issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase shares of common stock at a price of $ per share and shares at $ per share. The warrants expire on January 31, 2024. On April 14, 2022, the Company issued an additional warrant in exchange for professional services, granting the warrant holder the right to purchase an additional shares of common stock at a price of $ per share. The warrants expire on . As of September 30, 2023, all warrants remain outstanding and are exercisable to acquire 158,328 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 12 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 1,018,050 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on August 19, 2022, and warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
| 16 |
Warrant Holder 13 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 225,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on March 1, 2022, and warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 14 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 100,000 shares of common stock at a price of $1 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1 per share were exercised on August 19, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 15 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 100,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 16 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 100,000 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on June 27, 2022, and warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 17 – On January 28, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 52,050 shares of common stock at a price of $1.50 per share. The warrants expire on January 31, 2024. As part of the call, warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 18 – On March 30, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in conjunction with an investment, granting the warrant holder the right to purchase 250,000 shares of common stock at a price of $3 per share. The warrants expire on March 30, 2024. As of September 30, 2023, all warrants remain outstanding and are exercisable to acquire 84,217 shares of the Company’s common stock on an as converted basis resulting from the consummation of the Business Combination in October 2022.
Warrant Holder 19 – On March 30, 2022, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 300,000 shares of common stock at a price of $1.50 per share. The warrants expire on April 1, 2027. As part of the call, warrants at $1.50 per share were exercised on September 14, 2022. As of September 30, 2023, there are no warrants outstanding.
Warrant Holder 20 – On January 3, 2023, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 100,000 shares of common stock at a price of $2.50 per share. The warrants expire on January 2, 2027. As of September 30, 2023, all warrants remain outstanding.
Warrant Holder 21 – On January 3, 2023, Coeptis Therapeutics, Inc., issued a warrant to a third party in exchange for professional services, granting the warrant holder the right to purchase 250,000 shares of common stock at a price of $1.90 per share. The warrants expire on January 19, 2027. As of September 30, 2023, all warrants remain outstanding.
Warrant Holder 22 – On June 16, 2023, Coeptis Therapeutics, Inc., issued a warrant to a third party in conjunction with an investment, granting the warrant holder the right to purchase 126,000 shares of common stock at a price of $1.25 per share. The warrants expire on December 16, 2028. As of September 30, 2023, all warrants remain outstanding.
Warrant Holder 23 – On June 16, 2023, Coeptis Therapeutics, Inc., issued a warrant to a third party in conjunction with an investment, granting the warrant holder the right to purchase 84,000 shares of common stock at a price of $1.25 per share. The warrants expire on December 16, 2028. As of September 30, 2023, all warrants remain outstanding.
| 17 |
The warrants issued since May 28, 2021 and as of September 30, 2023 were valued using the Black-Scholes option pricing model using the following assumptions: 1) exercise price ranging from $1.00 to $5.00 per share, 2) fair value ranging from $4.80 to $6.00 per share, 3) discount rate ranging from 1.15% to 2.31%, 3) dividend rate of 0%, and 4) a term ranging from 2 to 5 years.
On April 19, 2022, Coeptis Therapeutics, Inc. initiated a warrant conversion call for certain warrants and on April 20, 2022, for additional warrants. The original expiration for the warrant conversions was set as May 19, 2022, and May 20, 2022. The expiration date was extended and moved to June 30, 2022. A second extension moved the expiration to July 15, 2022, and the third extension moved the expiration date for the warrant conversions to August 1, 2022. The final extension was extended and moved to September 13, 2022. Warrants that were part of the call and not exercised by this date expired.
| Schedule of warrant outstanding | ||||||||||||||||||||||||||||||||||||||||||||
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Coral Investment Partners Warrants | 1,000,000 | – | – | – | – | – | – | 500,000 | – | – | 500,000 | |||||||||||||||||||||||||||||||||
| Coral Investment Partners Warrants, as converted | 336,869 | – | – | – | – | – | – | 168,434 | – | – | 168,434 | |||||||||||||||||||||||||||||||||
| Warrant Holder 1 | 1,500,000 | – | 500,000 | – | – | – | – | 500,000 | – | – | 500,000 | |||||||||||||||||||||||||||||||||
| July 28, 2022 | (2,500 | ) | – | (2,500 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| 1,497,500 | – | 497,500 | – | – | – | – | 500,000 | – | – | 500,000 | ||||||||||||||||||||||||||||||||||
| Warrant Holder 1, as converted | 504,461 | – | 167,592 | – | – | – | – | 168,434 | – | – | 168,434 | |||||||||||||||||||||||||||||||||
| Warrant Holder 2 | 400,000 | – | 200,000 | – | – | – | – | 100,000 | – | – | 100,000 | |||||||||||||||||||||||||||||||||
| March 1, 2022 | (5,000 | ) | – | (5,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| June 27, 2022 | (270,000 | ) | – | (195,000 | ) | – | – | – | – | (75,000 | ) | – | – | – | ||||||||||||||||||||||||||||||
| Expired – September 13, 2022 | (25,000 | ) | – | – | – | – | – | – | (25,000 | ) | – | – | – | |||||||||||||||||||||||||||||||
| 100,000 | – | – | – | – | – | – | – | – | – | 100,000 | ||||||||||||||||||||||||||||||||||
| Warrant Holder 2, as converted | 33,687 | – | – | – | – | – | – | – | – | – | 33,687 | |||||||||||||||||||||||||||||||||
| Purple BioTech | 300,000 | – | – | – | – | – | – | – | – | – | 300,000 | |||||||||||||||||||||||||||||||||
| Purple BioTech, as converted | 101,061 | – | – | – | – | – | – | – | – | – | 101,061 | |||||||||||||||||||||||||||||||||
| Warrant Holder 3 | 600,000 | – | 600,000 | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Transfer to Warrant Holder 4 | (300,000 | ) | – | (300,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Transfer to Warrant Holder 5 | (175,000 | ) | – | (175,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| August 19, 2022 | (115,000 | ) | – | (115,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Expired – September 13, 2022 | (10,000 | ) | – | (10,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 3, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 4 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfer from Warrant Holder 3 | 300,000 | – | 300,000 | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| August 19, 2022 | (300,000 | ) | – | (300,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 4, as converted | – | – | – | – | – | – | – | – | – | – | – |
| 18 |
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfer from Warrant Holder 3 | 175,000 | – | 175,000 | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Transfer from Warrant Holder 9 | 200,000 | – | – | – | 200,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| 375,000 | – | 175,000 | – | 200,000 | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 5, as converted | 126,326 | – | 58,952 | – | 67,374 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 6 | 250,000 | – | – | – | 250,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 6, as converted | 84,217 | – | – | – | 84,217 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 7 | 400,000 | – | – | – | 400,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 7, as converted | 134,747 | – | – | – | 134,747 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 8 | 775,000 | – | – | – | 775,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| September 14, 2022 | (775,000 | ) | – | – | – | (775,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 8, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 9 | 200,000 | – | – | – | 200,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Transfer to Warrant Holder 5 | (200,000 | ) | – | – | – | (200,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 9, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 10 | 350,000 | – | – | – | 350,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| March 1, 2022 | (53,334 | ) | – | – | – | (53,334 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| August 19, 2022 | (50,000 | ) | – | – | – | (50,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | (246,666 | ) | – | – | – | (246,666 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 10, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 11 | 300,000 | – | 150,000 | – | – | – | – | 150,000 | – | – | – | |||||||||||||||||||||||||||||||||
| April 14, 2022 | 170,000 | – | – | – | 170,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| 470,000 | – | 150,000 | – | 170,000 | – | – | 150,000 | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 11, as converted | 158,328 | – | 50,530 | – | 57,268 | – | – | 50,530 | – | – | – |
| 19 |
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 12 | 1,018,050 | – | – | – | 1,018,050 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| August 19, 2022 | (100,000 | ) | – | – | – | (100,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | (918,050 | ) | – | – | – | (918,050 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 12, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 13 | 225,000 | – | – | – | 225,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| March 1, 2022 | (15,000 | ) | – | – | – | (15,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | (210,000 | ) | – | – | – | (210,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 13, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 14 | 100,000 | – | 100,000 | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| August 19, 2022 | (100,000 | ) | – | (100,000 | ) | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 14, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 15 | 100,000 | – | – | – | 100,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| September 14, 2022 | (100,000 | ) | – | – | – | (100,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 15, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 16 | 100,000 | – | – | – | 100,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| June 27, 2022 | (25,000 | ) | – | – | – | (25,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| September 14, 2022 | (75,000 | ) | – | – | – | (75,000 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 16, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 17 | 52,050 | – | – | – | 52,050 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| September 14, 2022 | (52,050 | ) | – | – | – | (52,050 | ) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 17, as converted | – | – | – | – | – | – | – | – | – | – | – |
| 20 |
| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 18 | 250,000 | – | – | – | – | – | – | – | – | 250,000 | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 18, as converted | 84,217 | – | – | – | – | – | – | – | – | 84,217 | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 19 | 300,000 | – | – | – | 300,000 | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| (300,000 | ) | – | – | – | (300,000 | ) | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||
| – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||
| Warrant Holder 19, as converted | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 20 | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| January 3, 2023 | 100,000 | – | – | – | – | – | – | – | 100,000 | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 20 | 100,000 | – | – | – | – | – | – | – | 100,000 | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 21 | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| January 20, 2023 | 250,000 | – | – | – | – | – | 250,000 | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 21 | 250,000 | – | – | – | – | – | 250,000 | – | – | – | – | |||||||||||||||||||||||||||||||||
| Pre-Funded Warrant | 1,350,000 | 1,350,000 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| June 21, 2023 | (605,000 | ) | (605,000 | ) | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||
| Pre-Funded Warrant | 745,000 | 745,000 | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Series A – Warrant | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| June 16, 2023 | 3,062,500 | – | – | – | – | 3,062,500 | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Series A – Warrant | 3,062,500 | – | – | – | – | 3,062,500 | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Series B – Warrant | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| June 16, 2023 | 3,062,500 | – | – | – | – | 3,062,500 | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Series B – Warrant | 3,062,500 | – | – | – | – | 3,062,500 | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 25 | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| June 16, 2023 | 126,000 | – | – | 126,000 | – | – | 250,000 | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 22 | 126,000 | – | – | 126,000 | – | – | 250,000 | – | – | – | – |
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| Warrant | $ | 0.0001 | $ | 1.00 | $ | 1.25 | $ | 1.50 | $ | 1.65 | $ | 1.90 | $ | 2.00 | $ | 2.50 | $ | 3.00 | $ | 5.00 | ||||||||||||||||||||||||
| contract | # Shares | $ | 2.97 | $ | 4.45 | $ | 5.94 | $ | 8.91 | $ | 14.84 | |||||||||||||||||||||||||||||||||
| Warrant Holder 26 | – | – | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||
| June 16, 2023 | 84,000 | – | – | 84,000 | – | – | 250,000 | – | – | – | – | |||||||||||||||||||||||||||||||||
| Warrant Holder 23 | 84,000 | – | – | 84,000 | – | – | 250,000 | – | – | – | – | |||||||||||||||||||||||||||||||||
| Total warrants outstanding for purchase of shares: | 12,072,500 | 745,000 | 822,500 | 210,000 | 1,020,000 | 6,125,000 | 250,000 | 1,150,000 | 100,000 | 250,000 | 1,400,000 | |||||||||||||||||||||||||||||||||
| Total warrants outstanding for purchase of shares, as converted: | 8,993,912 | 745,000 | 277,074 | 210,000 | 343,606 | 6,125,000 | 250,000 | 387,399 | 100,000 | 84,217 | 471,616 |
Options/Stock Awards – On January 27, 2023, the Company granted options to purchase an aggregate of 1,357,500 shares of our common stock under the 2022 Equity Incentive Plan, to various officers, directors, employees and consultants, at an average exercise price of $1.63 per share. The Company has also granted a stand-alone option to a former employee to purchase up to 100,000 shares of our common stock at an exercise price of $10 per share.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Leases – The Company leases office space under an operating lease commencing December 1, 2017 through November 30, 2019 and a first lease extensions commencing December 1, 2019 through May 31, 2020. The second lease extension extends the lease for twenty-four months, beginning on June 1, 2020 and ended on May 31, 2022. The third lease extension extends the lease for twenty-four months, beginning on June 1, 2022 and ending on May 31, 2024. The monthly rent is $3,750. On January 1, 2019, the Company adopted ASC Topic 842, Leases, requiring this lease to be recorded as an asset and corresponding liability on its condensed consolidated balance sheet. The Company records rent expense associated with this lease on the straight-line basis in conjunction with the terms of the underlying lease. During both the nine-month periods ended September 30, 2023 and 2022, rents paid totaled $33,750.
Future minimum rental payments required under the lease are as follows:
| Schedule of future minimum rental payments | ||||
| 2023 | $ | 11,250 | ||
| 2024 | 18,750 | |||
| Total minimum lease payments: | 30,000 | |||
| Less amount representing interest | (4,520 | ) | ||
| Present value of minimum lease payments: | $ | 25,480 | ||
As of September 30, 2023, the Company had recorded a right of use asset of $28,676, and current and non-current lease liabilities of $10,757 and $14,723, respectively.
Legal Matters – The Company is currently not a defendant in any litigation or threatened litigation that could have a material effect on the Company’s condensed consolidated financial statements.
University of Pittsburgh Option Agreement – On April 29, 2022, the Company entered into an exclusive option agreement with University of Pittsburgh for rights to three chimeric antigen receptor T cell (“CAR-T”) technologies that offer the potential to address a range of hematologic and solid tumors. Among the initial cancer indications under development are pre-clinical programs targeting breast cancer and ovarian cancer. The exclusive option agreement involves the intellectual property rights to three technologies jointly developed in the laboratories of Jason Lohmueller, Ph.D., Assistant Professor of Immunology; Alexander Deiters, Ph.D., Professor of Chemistry; and Olivera Finn, Ph.D., Professor of Immunology: 1) mSA2 affinity-enhanced biotin-binding CAR, 2) universal self-labeling SynNotch and CARs for programable antigen-targeting, and 3) conditional control of universal CAR-T cells through stimulus-reactive adaptors. Per the option agreement, the Company paid the University of Pittsburgh a non-refundable fee of $5,000 for the exclusive option to license the patent rights to each of the three technologies. On October 16, 2023, the Company terminated the remaining portion of the option agreement with the University of Pittsburgh.
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CAR T License – On August 31, 2022, the Company entered into an exclusive license agreement with the University of Pittsburgh for certain intellectual property rights related to the universal self-labeling SynNotch and CARs for programable antigen-targeting technology platform. The Company paid the University of Pittsburgh a non-refundable fee in the amount of $75,000 for the exclusive patent rights to the licensed technology. Under the terms of the agreement, the Company has been assigned the worldwide development and commercialization rights to the licensed technology in the field of human treatment of cancer with antibody or antibody fragments using SNAP-CAR T cell technology, along with (i) an intellectual property portfolio consisting of issued and pending patents and (ii) options regarding future add-on technologies and developments. In consideration of these rights, the Company paid an initial license fee of $75,000, and will have annual maintenance fees ranging between $15,000 and $25,000, as well as developmental milestone payments (as defined in the agreement) and royalties equal to 3.5% of net sales. On January 25, 2023, the Company entered into a corporate research agreement with the University of Pittsburgh for the pre-clinical development of SNAP-CART cells targeting HER2. The Company agreed to pay $716,714 for performance-based milestones.
In September 2023, the Company expanded its exclusive license agreement with the University of Pittsburgh to include the SNAP-CAR technology platform in natural killer (NK) cells. The Company agreed to pay $2,000 to amend the agreement.
Deverra Therapeutics, Inc. – On August 16, 2023, the Company entered into an exclusive licensing arrangement (the “License Agreement”) with Deverra Therapeutics Inc. (“Deverra”), pursuant to which the Company completed the exclusive license of key patent families and related intellectual property related to a proprietary allogeneic stem cell expansion and directed differentiation platform for the generation of multiple distinct immune effector cell types, including natural killer (NK) and monocyte/macrophages. The License Agreement provides the Company with exclusive rights to use the license patents and related intellectual property in connection with development and commercialization efforts in the defined field of use (the “Field”) of (a) use of unmodified NK cells as anti-viral therapeutic for viral infections, and/or as a therapeutic approach for treatment of relapsed/refractory AML and high-risk MDS; (b) use of Deverra’s cell therapy platform to generate NK cells for the purpose of engineering with Coeptis SNAP-CARs and/or Coeptis GEAR Technology; and (c) use of Deverra’s cell therapy platform to generate myeloid cells for the purpose of engineering with the Company’s current SNAP-CAR and GEAR technologies. In support of the exclusive license, the Company also entered into with Deverra (i) an asset purchase agreement (the “APA”) pursuant to which the Company purchased certain assets from Deverra, including but not limited to two Investigational New Drug (IND) applications and two Phase 1 clinical trial stage programs (NCT04901416, NCT04900454) investigating infusion of DVX201, an unmodified natural killer (NK) cell therapy generated from pooled donor CD34+ cells, in hematologic malignancies and viral infections and (ii) a non-exclusive sublicense agreement (the “Sublicense Agreement”), in support of the assets obtained by the exclusive license, pursuant to which the Company sublicensed from Deverra certain assets which Deverra has rights to pursuant a license agreement (“FHCRC Agreement”) by and between Deverra and The Fred Hutchinson Cancer Research Center (“FHCRC”).
As consideration for the transactions described above, the Company paid Deverra approximately $570,000 in cash, issued to Deverra shares of the Company’s common stock and assumed certain liabilities related to the ongoing clinical trials. Total consideration paid was $4,937,609, which was fully expensed in accordance with ASC 730, and is reflected within research and development in the accompanying condensed consolidated statement of operations for the three and six month periods ended September 30, 2023. In addition, in accordance with the terms of the Sublicense Agreement, the Company agreed to pay FHCRC certain specified contingent running royalty payments and milestone payments under the FHCRC Agreement, in each case to the extent such payments are triggered by the Company’s development activities.
On October 26, 2023, the Company entered into a Shared Services Agreement (“SSA”) with Deverra, in accordance with requirements set forth in the APA. Under the terms of the SSA, Coeptis and Deverra will share resources and collaborate to further the development of Coeptis’ GEAR and SNAP-CAR platforms, as well as the purchased and licensed assets under the License Agreement and APA. The term of the SSA is six months from the effective date.
Registration Rights
Pursuant to a registration rights agreement entered into on October 29, 2020, the holders of the founder shares, the Private Placement Warrants and underlying securities, and any securities issued upon conversion of Working Capital Loans (and underlying securities) would be entitled to registration rights pursuant to a registration rights agreement. The holders of at least a majority in interest of the then-outstanding number of these securities were entitled to make up to three demands, excluding short form demands, that occurredthe Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. Notwithstanding the foregoing, Imperial, I-Bankers and Northland did not exercise their demand and “piggyback” registration rights after five (5) and seven (7) years after the balance sheeteffective date of the registration statement and did not exercise its demand rights on more than one occasion. The registration rights agreement did not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company would bear the expenses incurred in connection with the filing of any such registration statements.
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The Company sponsors a qualified profit-sharing plan with a 401(k) feature that covers all eligible employees. Participation in the 401(k) feature of the plan is voluntary. Participating employees may defer up to 100% of their compensation up to the date thatmaximum prescribed by the financial statementsInternal Revenue Code. The plan permits for employee elective deferrals but has no contribution requirements for the Company. During the three and nine-month periods ended September 30, 2023 and 2022, no employer contributions were issued. Other than as described in these notesmade.
NOTE 8 – INCOME TAXES
For the three and nine months ended September 30, 2023 and 2022, respectively, no income tax expense or benefit was recognized. The Company’s deferred tax assets are comprised primarily of net operating loss carryforwards. The Company maintains a full valuation allowance on its deferred tax assets since it has not yet achieved sustained profitable operations. As a result, the Company has not recorded any income tax benefit since its inception.
NOTE 9 – NOTE RECEIVABLE
On July 19, 2023 the Company (“Lender”) entered into a Promissory Note agreement with Deverra (“Borrower”). The Company agreed to make advances of principal to the condensed financial statements,Borrower of up to an aggregate amount equal to $572,000. Any advances are at the sole discretion of the Company. The outstanding unpaid principal balance of the Note bears interest at 3% per annum and was due and payable on the Maturity Date, September 30, 2023.
In the event that a certain business transaction between the Lender and Borrower as contemplated by that certain binding term sheet dated April 13, 2023, and referenced in Note 6, is consummated prior to the Maturity Date, the full amounts due under this Note shall be applied against the cash portion of any closing payment due from the Lender in connection with such transaction and any excess amounts under this Note shall be treated as additional purchase price in connection with the transaction.
As of September 30, 2023, and in relation to the Deverra asset purchase referenced in Note 6, $567,609 of principal and $2,892 of interest were applied against the cash portion of the closing payment with the Lender in connection with such transaction. The Note is considered paid in full.
In September 2023, the Company did not identifyentered into a Note agreement with a third party borrower. The Company agreed to issue shares of common stock to the borrower for a principal sum amount of $500,000. The outstanding unpaid principal balance of the Note bears interest at 6% per annum and is due and payable to the Company on the Maturity Date, August 30, 2024.
In September 2023, the Company entered into a Note agreement with a third party borrower. The Company agreed to issue shares of common stock to the borrower for a principal sum amount of $2,000,000. The outstanding unpaid principal balance of the Note bears interest at 6% per annum and is due and payable to the Company on the Maturity Date, August 30, 2024.
NOTE 10 – RELATED PARTY TRANSACTION
In September 2023, the Company entered into a transaction with AG Bio Life Capital I LP (“AG”), a Delaware limited partnership, where an employee of the Company is the general partner. The Company agreed to issue shares of common stock of the Company (“AG Shares”) to AG, in exchange for $600,000, $100,000 payable in cash and the balance payable under a promissory note (“AG Note”). The principal amount including all interest under the AG Note is due and payable by AG no later than August 30, 2024 (the “AG Maturity Date”). The outstanding unpaid principal balance of the AG Note bears interest commencing as of the Company’s next registration statement at the rate of six (6%) percent per annum, which interest rate will increase to eighteen (18%) percent per annum in the event an event of default occurs under the AG Note, computed on the basis of the actual number of days elapsed and a year of 365 days. AG has the option of repaying the obligations under the AG Note in advance of the AG Maturity Date, in whole or in part, at any other subsequent eventstime upon at least thirty (30) days prior written notice delivered to the Company. AG has certain obligations to contribute the proceeds of the sale of its AG Shares to the Company, in the event that any AG Shares are sold prior to the AG Maturity Date.
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NOTE 11 – SUBSEQUENT EVENTS
Management has performed a review of items and transactions occurring after September 30, 2023 to determine if there were any that would have requiredrequire adjustment to or disclosure in the accompanying condensed consolidated financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSstatements, noting no such items or transactions other than the following items.
ReferencesOn October 16, 2023, the Company terminated the exclusive option agreement with the University of Pittsburgh for rights to three chimeric antigen receptor T cell (“CAR-T”) technologies that offer the potential to address a range of hematologic and solid tumors. See Note 6, Commitments and Contingencies, for further information.
On October 26, 2023, the Company completed a private placement of 777,000 shares of our common stock, pre-funded warrants exercisable to acquire up to 1,223,000 shares of our common stock, Series A Warrants exercisable to acquire up to 2,000,000 shares of our common stock and Series B Warrants exercisable to acquire up to 2,000,000 shares of our common stock, for net proceeds of approximately $1.78 million, after offering costs. The Pre-funded warrants are immediately exercisable, at a price of $0.0001 per share, with no expiration date. The Series A Warrants and the Series B Warrants are referred to herein together as the “Series Warrants.” The shares of common stock and Series Warrants were purchased together and then immediately separable and were issued separately. The Series A Warrants and Series B Warrants are exercisable on or after the earlier of (i) the date on which the Company’s stockholders approve the issuance of the shares issuable upon exercise of the Series Warrants or (ii) April 26, 2024 at an exercise price of $1.36 per share. The Series A Warrants have a term of exercise equal to eighteen (18) months and the Series B Warrants have a term of exercise equal to 5 and one-half (5.5) years. This private placement was conducted with the same underwriter as the June public offering, and as a result, each Series Warrant issued in this report (the “Quarterly Report”)connection with the June offering was repriced from an exercise price of $1.65 per share to “we,” “us” or$1.36 per share. In connection with the “Company” refer to Bull Horn Holdings Corp. References to our “management” or our “management team” refer to our officers and directors, and referencesprivate placement the Company also issued to the “Sponsor” referexclusive placement agent warrants exercisable to Bull Horn Holdings Sponsor LLC. The following discussion and analysisacquire up to 120,000 shares of our common stock at an exercise price of $1.40 per share.
On October 26, 2023, the Company entered into a Shared Services Agreement (“SSA”) with Deverra, in accordance with requirements set forth in the APA. Under the terms of the Company’s financial conditionSSA, Coeptis and resultsDeverra will share resources and collaborate to further the development of operations should be read in conjunction withCoeptis’ GEAR and SNAP-CAR platforms, as well as the financial statementspurchased and licensed assets under the notes thereto containedLicense Agreement and APA. The term of the SSA is six months from the effective date. See Note 6, Commitments and Contingencies, for further information.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
As discussed elsewhere in this Quarterly Report. Certain information containedReport on Form 10-Q, pursuant to the Merger, we acquired our primary operating subsidiary Coeptis Therapeutics, Inc. The Merger was accounted for as a “reverse merger,” and Coeptis Therapeutics, Inc. was deemed to be the accounting acquirer in the discussionMerger. Consequently, the financial condition, results of operations and analysis set forthcash flows discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations discussed below includes forward-looking statements that involve risksare those of Coeptis Therapeutics, Inc. and uncertainties.its consolidated subsidiaries. When we use words in this section like “we,” “us”, “our,” the “Company” and words of the like, unless otherwise indicated, we are referring to the operations of our wholly-owned subsidiaries, including Coeptis Therapeutics, Inc.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements”contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended (the “Securities Act”) and Section 21E12E of the Securities Exchange Act of 1934, including or related to our future results, certain projections and business trends. Assumptions relating to forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. When used in this Report, the words “estimate,” “project,” “intend,” “believe,” “expect” and similar expressions are intended to identify forward-looking statements. Although we believe that assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate, and we may not realize the results contemplated by the forward-looking statement. Management decisions are subjective in many respects and susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our business strategy or capital expenditure plans that may, in turn, affect our results of operations. In light of the significant uncertainties inherent in the forward-looking information included in this Report, you should not regard the inclusion of such information as our representation that we will achieve any strategy, objective or other plans. The forward-looking statements contained in this Report speak only as of the date of this Report as stated on the front cover, and we have no obligation to update publicly or revise any of these forward-looking statements. These and other statements which are not historical facts are based largely on management’s current expectations and involveassumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expectedcontemplated by such forward-looking statements. These risks and projected. All statements, other than statementsuncertainties include, among others, the failure to successfully develop a profitable business, delays in identifying customers, and the inability to retain a significant number of historical fact includedcustomers, as well as the risks and uncertainties described in this Form 10-Q including, without limitation, statements in this “Management’s“Risk Factors” section to our Annual Report for the fiscal year ended December 31, 2022.
When we use words like “we,” “us”, “our,” the “Company” and words of the like, unless otherwise indicated, we are referring to the operations of us and our wholly-owned subsidiaries Coeptis Therapeutics, Inc. and Coeptis Pharmaceuticals, Inc. (“Coeptis”).
Objective
The objective of our Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’sOperations (“MD&A”) is to provide users of our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whetherfollowing:
| · | A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; | |
| · | Useful context to the financial statements; and | |
| · | Information that allows assessment of the likelihood that past performance is indicative of future performance. |
Our MD&A is provided as a resultsupplement to, and should be read together with, our unaudited financial statements for the three and nine months ended September 30, 2023 and 2022, included in Part I, Item 1 of new information, future events or otherwise.this Form 10-Q.
OverviewCompany History
We are a blank check companyGeneral. The Company was originally incorporated in the British Virgin Islands on November 27, 2018 formedunder the name Bull Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware. On October 28, 2022, in connection with the closing of the Merger, the Company changed its corporate name from Bull Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.”
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The Merger Transaction. On October 28, 2022, a wholly-owned subsidiary of Bull Horn Holdings Corp., merged with and into Coeptis Therapeutics, Inc., with Coeptis Therapeutics, Inc. as the surviving corporation of the Merger. As a result of the Merger, the Company acquired the business of Coeptis Therapeutics, Inc., which now continues its existing business operations as the Company’s wholly-owned subsidiary.
About the Company’s Subsidiaries. The Company now operates through its direct and indirect wholly-owned subsidiaries Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc. and Coeptis Pharmaceuticals, LLC.
Issuance under Merger Transaction. Simultaneously with the closing of the Merger, all of the issued and outstanding shares of Coeptis Therapeutics, Inc. common stock (including the shares of common stock underlying Coeptis’ series B preferred stock) converted, on a 2.96851721 for 1 basis, into shares of our Common Stock. As of the Merger, there were no Coeptis options outstanding, and there were warrants outstanding to purchase an aggregate of 4,642,500 shares of Coeptis common stock at an average exercise price of $2.67 per share, which warrants converted on the closing of the Merger into warrants to purchase an aggregate of 1,563,912 shares of our common stock at an average exercise price of $7.93 per share.
On the closing of the Merger, the former Coeptis common stock was exchanged for the purposeright to receive 17,270,079 shares of effectingour common stock (including 2,694,948 shares of common stock issued in exchange for the Coeptis series B preferred stock issued and outstanding). Our common stockholders before the Merger retained 2,246,760 shares of our common stock. As a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intendresult, immediately following the closing of the Merger, Coeptis’ former stockholders and our then existing stockholders held approximately 88% and 12%, respectively, of the total combined voting power of all classes of our stock entitled to effectuatevote.
As discussed in our Business Combination using cash derivedAnnual Report on Form 10-K, the Merger was treated as a recapitalization of the Company, and was accounted for as a “reverse merger,” and Coeptis was deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger will be those of Coeptis, and the condensed consolidated financial statements after completion of the Merger will include the assets and liabilities of Coeptis, historical operations of Coeptis and operations of Coeptis from the proceedsclosing of the Initial Public OfferingMerger.
Company History of Coeptis Therapeutics, Inc.
Coeptis Pharmaceuticals, LLC was formed on July 12, 2017 as a Pennsylvania multi-member limited liability company. On December 1, 2018, the members of LLC contributed their interest to a newly formed corporation, Coeptis Pharmaceuticals, Inc. As of December 1, 2018, the LLC became a disregarded single-member limited liability company which is wholly owned by the newly formed corporation. On February 12, 2021, Vinings Holdings, Inc., a Delaware corporation (“Vinings”), merged (the “Merger”) with and into Coeptis Pharmaceuticals, Inc. On July 12, 2021, the salecompany has legally changed its name from Vinings Holdings, Inc. to Coeptis Therapeutics, Inc. Coeptis was the surviving corporation of that Merger. As a result of the Private Warrants, our shares, debt orMerger, Vinings acquired the business of Coeptis and will continue the existing business operations of Coeptis as a combinationwholly owned subsidiary. The Merger was treated as a recapitalization of cash, sharesthe Company for financial accounting purposes. The historical financial statements of Vinings before the Merger were replaced with the historical financial statements of Coeptis before the Merger in all future filings with the Securities and debt.Exchange Commission (the “SEC”).
Overview and Outlook
We expectare a pharmaceutical company which owns, acquires, and develops drug products and pharmaceutical technologies which offer improvements to current therapies. Our products and technologies are intended to be commercialized in the US and worldwide markets. Since our inception in 2017, it has acquired and commercialized two drug products for the US market, which were approved as 505b2 applications. These anti-hypertension products were launched into the US market during 2020 through a marketing partner. At launch, the sales and promotional efforts were significantly impeded by the limitation of the global pandemic and as such, we have since abandoned all activities and ownership pertaining to both products. We also began the development of several ANDA products which we divested in 2019 to a larger generic pharmaceutical drug manufacturer, and have moved away from focusing on the commercialization of generic products. In early 2021, we entered into strategic partnerships to co-develop improved therapies for the auto-immune and oncology markets. Following the reverse merger transaction, we continue to incurfocus on identifying and investing resources into innovative products and technologies which we believe will significantly transform our current products and therapies.
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During 2020 and continuing through 2021, we faced several operational challenges related to the COVID-19 global pandemic, which we continue to work to overcome. The launch of both 505b2 products was impacted because of various COVID-19 limitations, most notably field sales personnel were not able to make healthcare provider visits in person; thereby limiting the awareness of the availability of these products. We explored and implemented several non-personal promotion efforts, but given the global limitations and dynamics, it was challenging to achieve expected sales. We have since abandoned all activities and ownership pertaining to both products.
In May 2021, we entered into two exclusive option agreements (the “CD38 Agreements”) relating to separate technologies designed to improve the treatment of CD38-related cancers (e.g., multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia) with VyGen-Bio, Inc. (“Vy-Gen”), a majority-owned subsidiary of Vycellix, Inc., a Tampa, Florida-based private, immuno-centric discovery life science company focused on the development of transformational platform technologies to enhance and optimize next-generation cell and gene-based therapies, including T cell and Natural Killer (“NK”) cell-based cancer therapies.
The CD38 Agreements relate to two separate Vy-Gen drug product candidates, as follows:
CD38-GEAR-NK. This Vy-Gen drug product candidate is designed to protect CD38+ NK cells from destruction by anti-CD38 monoclonal antibodies, or mAbs. CD38-GEAR-NK is an autologous, NK cell-based therapeutic that is derived from a patient’s own cells and gene-edited to enable combination therapy with anti-CD38 mAbs. We believe CD38-GEAR-NK possesses the potential to minimize the risks and side effects from CD38-positive NK cell fratricide.
Market Opportunity. We believe CD38-GEAR-NK could potentially revolutionize how CD38-related cancers are treated, by protecting CD38+ NK cells from destruction by anti-CD38 mAbs, thereby promoting the opportunity to improve the treatment of CD38-related cancers, including multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia.
Multiple myeloma is the first cancer indication targeted with CD38-GEAR-NK. The global multiple myeloma market was $19.48B in 2018 and is expected to reach $31B by 2026 [Source: Fortune Business Reports].
CD38-Diagnostic. This Vy-Gen product candidate is an in vitro diagnostic tool to analyze if cancer patients might be appropriate candidates for anti-CD38 mAb therapy. CD38-Diagnostic is an in vitro screening tool that provides the ability to pre-determine which cancer patients are most likely to benefit from targeted anti-CD38 mAb therapies, either as monotherapy or in combination with CD38-GEAR-NK. CD38-Diagnostic also has the potential to develop as a platform technology beyond CD38, to identify patients likely to benefit for broad range of mAb therapies across myriad indications.
Market Opportunity. We believe CD38-Diagnostic provides opportunity to make more cost-effective medical decisions for the treatment of B cell malignancies with high CD38 expression, including multiple myeloma, which may help to avoid unnecessary administration of anti-CD38 therapies. CD38-Diagnostic could prevent patients from being subjected to ineffective therapy and enable significant costssavings to healthcare systems.
CD38-Diagnostic could be offered as a companion diagnostic for determining patient suitability and likelihood of positive treatment outcomes for CD38-GEAR-NK and/or CD38 monoclonal antibody therapies.
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On September 28, 2023, we received FDA’s response to our 513(g) request for information submission pertaining to the classification of the CD38-Diagnostic. The CD38-Diagnostic has been designated a Class II type device. The confirmation of this classification is beneficial as we’re now better able to plan for and execute future development activities.
GEAR-NK Product Overview. GEAR-NK is an autologous, gene-edited, natural killer cell-based therapeutic development platform that allows for modified NK cells to be co-administered with targeted mAbs, which, in the pursuitabsence of the GEAR-NK, would otherwise be neutralized by mAb therapy.
In May 2021, we made initial payments totaling $750,000 under the CD38 Agreements, to acquire the exclusive options to acquire co-development rights with respect to CD38-GEAR-NK and CD38-Diagnostic. On August 15, 2021, we entered into amendments to each of the CD38 Agreements. In connection with the two amendments, we delivered to VyGen promissory notes aggregating $3,250,000 with maturity dates of December 31, 2021, and made a cash payment of $1,000,000, upon which cash payment we exercised the two definitive option purchase agreements. In December 2021, we completed our payment obligations to secure the 50% ownership interest in the CD38-Diagnostic, and subsequently in November 2022 we completed our purchase of the 50% ownership interest for the CD38-GEAR-NK product candidate. Details of the two August amendments and the December amendment are summarized in the amendments attached at Exhibits 4.1 and 4.2 to our Current Report on Form 8-K dated August 19, 2021 and Exhibits 4.2 to the our Current Report on Form 8-K dated December 27, 2021.
In connection with the Vy-Gen relationship and the Company’s ownership in the two product candidates described above, in December 2021 the Company and Vy-Gen entered into a co-development and steering committee agreement. The co-development and steering committee agreement provides for the governance and economic agreements between the Company and Vy-Gen related of the development of the two Vy-Gen drug product candidates and the revenue sharing related thereto, including each company having a 50% representation on the steering committee and each company receiving 50% of the net revenues related to the Vy-Gen product candidates. Details of the co-development and steering committee agreement are summarized in our Current Report on Form 8-K dated December 27, 2021, including Exhibits 4.1 and 4.2 thereto.
Vici Health Sciences, LLC. In 2019, we entered into a co-development agreement with Vici Health Sciences, LLC (“Vici”). Through this partnership, we would co-develop, seek FDA approval and share ownership rights with Vici to CPT60621, a novel, ready to use, easy to swallow, oral liquid version of an already approved drug used for the treatment of Parkinson’s Disease (PD). As we continue to direct its operational focus towards the Vy-Gen opportunities previously described, we have recently stopped allocating priority resources to the development of CPT60621. We are currently in negotiations in which Vici intends to buy-out most or all of our acquisition plans.remaining ownership rights.
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Our Results of Operations
Revenue. To date, we have generated minimal revenue mostly from consulting arrangements and product sales. Due to the COVID-19 global pandemic and the resulting market dynamics, it is uncertain if the current marketed products can generate sufficient sales to cover expenses.
Operating Expenses. General and administrative expenses consist primarily of salaries and related costs for personnel and professional fees for consulting services related to regulatory, pharmacovigilance, quality, legal, and business development. We cannot assure youexpect that our plans to complete a Business Combinationgeneral and administrative expenses will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through September 30, 2020 were organizational activities and those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating incomeincrease in the form of interest income on marketable securities held afterfuture as we increase our headcount to support the Initial Public Offering.business growth. We expectalso anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, insurance, and investor relation expenses associated with operating as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.company.
Research and developments costs will continue to be dependent on the strategic business collaborations and agreements will are anticipating in the future.
We expect development costs to increase to support our new strategic initiatives.
Comparison of the three months ended September 30, 2023 and September 30, 2022
Revenues. Revenues, which were $0 and $0 during the three months ended September 30, 2023 and 2022 respectively, continue to be minimal. The Company’s activities primarily include product development, raising capital, and building infrastructure. Management does not expect the Company to generate any significant revenue for at least the next two years, during which time drug development will continue toward the goal of commercializing, through a partnership or otherwise, one or more of the Company’s target products or technologies.
Operating Expenses
Overview. Operating expenses increased from $5,568,709 in the three months ended September 30, 2022 to $7,831,431 in the three months ended September 30, 2023. The increase is mainly due to the increase in research and development costs related to the August 2023 asset purchase agreement with Deverra Therapeutics, Inc., discussed in Note 6, Commitments and Contingencies.
General and Administrative Expenses. For the three months ended September 30, 2020, we had a net loss2023 and 2022, general and administrative expenses are included in operating expenses. All costs incurred can be attributed to the planned principal operations of $50, which consisted of operating costs.product development, raising capital, and building infrastructure.
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Interest Expense. Interest expense was $56,423 for the three months ended September 30, 2022 and was $19,800 for the three months ended September 30, 2023. Interest was related to notes payable, which are discussed in detail in the notes to the condensed consolidated financial statements, incorporated by reference herein.
Comparison of the nine months ended September 30, 2023 and September 30, 2022
Revenues. Revenues, which were $0 and $0 during the nine months ended September 30, 2023 and 2022 respectively, continue to be minimal. The Company’s activities primarily include product development, raising capital, and building infrastructure. Management does not expect the Company to generate any significant revenue for at least the next two years, during which time drug development will continue toward the goal of commercializing, through a partnership or otherwise, one or more of the Company’s target products or technologies.
Operating Expenses
Overview. Operating expenses decreased from $31,152,697 in the nine months ended September 30, 2022 to $17,950,241 in the nine months ended September 30, 2023. The decrease is mainly due to lower professional services expense related to equity transactions.
General and Administrative Expenses. For the nine months ended September 30, 2020, we had a net loss2023 and 2022, general and administrative expenses are included in operating expenses. All costs incurred can be attributed to the planned principal operations of $498, which consisted of $500 operating costs, offset by interest income of $2.product development, raising capital, and building infrastructure.
ForInterest Expense. Interest expense was $176,068 for the threenine months ended September 30, 2019, we had a net income of $2,2022 and was $93,853 for the nine months ended September 30, 2023. Interest was related to notes payable, which consisted of interest income.are discussed in detail in the notes to the condensed consolidated financial statements, incorporated by reference herein.
Financial Resources and Liquidity. The Company had limited financial resources during the year ended December 31, 2022 with cash and cash equivalents of $3,791,302. For the nine months ended September 30, 2019, we had2023, cash and cash equivalents decreased to $1,411,510, primarily as a net loss of $1,024, which consisted of $1,026 operating costs, offset by interest income of $2.
Liquidity and Capital Resources
As of September 30, 2020, we had $307 cash. Until the consummationresult of the Initial Public Offering, our only source of liquidity was an initial purchase of ordinary shares bycash paid in connection with the Sponsor and loans from our Sponsor.
Subsequentdeals related to the end ofCompany’s public offering that closed in June 2023. During both these time periods, the quarterly period covered by this Quarterly Report,Company continues to operate a minimal infrastructure in order to maintain its ability to fund operations, keep full focus on November 3, 2020, we consummated the Initial Public Offering of 7,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $75,000,000. Simultaneouslyall product development targets and to stay current with the closing of the Initial Public Offering, we consummated the sale of 3,750,000 Private Warrants to the Sponsor, Imperial, I-Bankers and Northland at a price of $1.00 per Private Warrant generating gross proceeds of $3,750,000.
Following the Initial Public Offering and the sale of the Private Warrants, a total of $75,750,000 was placed in the Trust Account. We incurred $4,243,264 in transaction costs, including $1,500,000 of underwriting fees, $2,250,000 of deferred underwriting fees and $493,264 of other costs.
We intend to use substantially all of the funds held inCompany’s scientist consultants, legal counsel, and accountants. David Mehalick, our President and Chief Executive Officer, and Daniel A. Yerace, our Vice President of Operations, both agreed to waive their rights to a 2023 guaranteed bonus payment under their respective employment agreements to further maintain our ability to fund operations. During 2023, the Trust Account, including any amounts representing interest earned onCompany believes that the Trust Account, which interest shall be netability to raise capital through equity transactions will increase liquidity and enable the execution of taxes payable and excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.management’s operating strategy.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $1.00 per warrant, at the option of the lender. The units would be identical to the Private Warrants.
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We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described below.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
The underwriters are entitled toCompany is a deferred fee of three percent (3.0%)smaller reporting company as defined by Rule 12b-2 of the gross proceeds ofExchange Act and is not required to provide the Initial Public Offering, or $2,250,000 (or up to $2,587,500 if the underwriters’ over-allotment is exercised in full). The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.information under this Item.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
| Item 4. | Controls and Procedures |
Disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’sSecurities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officerprincipal executive and Chief Financial Officer,principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
EvaluationOur management, with the participation of Disclosure Controlsour chief executive officer (our principal executive officer) and Procedures
As required by Rules 13a-15f and 15d-15 underour chief financial officer (our principal financial officer) evaluated the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report on Form 10-Q. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2020. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that2023, our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.operating effectively.
Changes in Internal Control Over Financial Reporting
There were no changesOur Annual Report on Form 10-K contains information regarding a material weakness in our internal control over financial reporting (as definedas of December 31, 2022. For example, the Company lacked adequate segregation of duties which led to situations where individuals had access to both initiate and approve transactions with no additional formal review process. This material weakness was self-diagnosed, and was not issued by our independent auditors, Turner, Stone & Company, LLP. Management believes that as a result of actions taken by the Company, as discussed below, our internal controls over financial reporting are operating effectively as of September 30, 2023.
In an effort to address the Company’s internal accounting personnel deficiencies, in Rules 13a-15(f) and 15d-15(f)February 2021 we hired a consulting group to assist our Chief Financial Officer. Accordingly, the Company believes, based on its knowledge, that: (i) this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under the Exchange Act) that occurred duringwhich they were made, not misleading with respect to the period covered by this report; and (ii) the financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this quarterly report.
On May 17, 2023, the Company announced that have materially affected, or are reasonably likelyBrian Cogley was appointed as the Company’s new Chief Financial Officer, effective immediately. He replaced Christine Sheehy, who remains with the Company to materially affect, oursupport the finance team and also in her new role as Vice President of Compliance and Corporate Secretary.
Mr. Cogley has over 15 years of accounting and finance experience, having previously held positions of increasing authority at two “Big 4” accounting firms and served on the management teams of multiple companies in diverse industries. An accountant by training, Mr. Cogley arrives at Coeptis with a career in corporate finance and accounting during which he advised and led the financial operations for companies in multiple industries including life sciences, pharmaceuticals, financial services, and manufacturing. Mr. Cogley’s diverse experience and knowledge of the Sarbanes-Oxley control environment and SEC reporting requirements will help bolster the Company’s internal control over financial reporting.controls and operational efficiency.
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| Item 1. | Legal Proceedings |
None.
| Item 1A. | Risk Factors |
Factors that could cause our actual resultsIn addition to differ materially from thosethe other information set forth in this Quarterly Report includereport, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results. The risks described in our final prospectus filed withAnnual Report on Form 10-K are not the SEC on October 29, 2020. Asonly risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
All prior sales of the date of this Quarterly Report, other than as described below, thereunregistered securities have been no material changes to the risk factorsproperly disclosed in our final prospectus filed with the SEC.
prior SEC filing.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On November 3, 2020, we consummated our Initial Public Offering of 7,500,000 Units, at a price of $10.00 per Unit, generating total gross proceeds of $75,000,000. Imperial Capital, LLC acted as the sole book-running manager. The securities sold in the offering were registered under the Securities Act on registration statements on Form S-1 (No. 333-248940). The registration statements became effective on October 29, 2020.
Simultaneously with the consummation of the Initial Public Offering, we consummated a private placement of 3,750,000 Private Warrants to our Sponsor, Imperial, I-Bankers and Northland at a price of $1.00 per Private Warrant, generating total proceeds of $3,750,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the Initial Public Offering, and the sale of the Private Warrants, $75,750,000 was placed in the Trust Account.
We paid a total of $1,500,000 in underwriting discounts and commissions and $493,264 for other costs and expenses related to the Initial Public Offering. In addition, the underwriter agreed to defer $2,250,000 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
| Item 3. | Defaults Upon Senior Securities |
Not applicable.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
None.
| Item 6. | Exhibits |
The following exhibits are attached hereto or incorporated by reference herein (numbered to correspond to Item 601(a) of Regulation S-K, as promulgated by the Securities and Exchange Commission) and are filed as part of or incorporated by reference into, this Quarterly Report on Form 10-Q.10-Q:
| Section 1350 Certification of Principal Executive | ||
| Section 1350 Certification of Principal Financial | ||
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | ||
| Inline XBRL Taxonomy Extension Schema Document | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
| Inline XBRL Taxonomy Extension | ||
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Registrant | ||
| Date: November 9, 2023 | By: | /s/ David Mehalick |
| David Mehalick | ||
| Chief Executive Officer, Principal Executive Officer | ||
| Date: | By: | /s/ | |
| Chief Financial Officer, | |||
17
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